Age Debate: E-wallets vs paper?

We have to take practical issues into consideration
India is still an emerging economy. A sizeable population depends on agriculture and the unorganised sector. The recent move to demonetise currency notes has hit them the hardest. About 52 per cent of India’s population does not have a bank account. What has the government done in the last two and a half years to improve this figure?

It’s a very easy back-of-the-envelope calculation: take the number of credit and debit cards and juxtapose them with the total population, and the answer will be clear.

Let’s look at the ATM figures. I am given to understand that there are a little over two lakh ATMs across the country. Is it possible for any bank or infrastructure of roughly two lakh units to service 125 crore Indians? It is just not possible with the current ATM infrastructure in place. This is just the front-end problem which we all know about.

Look at the back end issues. Are the servers of our public sector and private banks capable of handling the extra load which will be put on them? The first weekend after demonetisation there were reports that credit card operations were being hampered as servers had become slow. These are the problems which are being faced by all of us.

In how many small towns do you have online grocery shopping or shopping for daily needs? It will be a negligible figure compared to the number of districts India has. So there is no way that with the existing infrastructure we can move ahead and become a cashless economy.

We should understand that there is an economy under the banking sector while the other is a cash economy. The cash economy should not be misunderstood with the black economy.

Take the case of truckers who are moving goods. They all have cash as they have to meet their expenses in cash. Look at textile manufacturing units where wages are paid in cash or other smaller units where cash delivery is made. All this is done in cash, as it is economically viable.

The PM’s current move is an ill-thought-out one. The government says it was working on this for the last six months. Then why were no arrangements made? Look at the lines across all banks and ATMs. Once there used to be food rationing, and now there is cash rationing.

This entire chaos is happening as there is no infrastructure in place to handle the current volume. I am not opposed to a cashless economy but we also have to take practical issues into consideration.

First there should be several assessments about the ATMs-to-people ratio, cards-to-people ratio and banks-to-people ratio. After which new branches and ATMs and cards should come into play, only then will such a move be successful. But with the current infrastructure going cashless will only be a disaster for farmers and the poor.

(As told to Ashhar Khan)
Madhu Yaskhi Goud is a Congress spokesperson and a former MP

This move has potential to transform our country
India has always been a land of contrasts. Recently, I saw television pictures of 95-year-old Heeraben arriving at a bank in Gandhinagar to exchange banned high-value currency notes. The images reinforced an appeal to citizens by her son Narendra Modi — who happens to be the country’s Prime Minister — to bear with him in the battle against corruption and black (unaccounted) money.

As rest of the world comes to terms with US President-elect Donald Trump, Indians are standing in long queues at banks and ATMs to withdraw cash for daily needs.

The demonetisation move has the potential to transform and leapfrog India into one of the most progressive and digital nations globally. The rural economy, on which 800 million people or 65 per cent of India’s population depend, is largely driven by cash. Farmers buy seeds, fertilisers and farm equipments in cash, pay their workers in cash, and traders and commission agents pay farmers in cash.

All this needs to change. We need to adopt cashless methods for transactions. Digital payments by mobile wallets bring in convenience with a few clicks, tendering exact change, and so on. That’s the reason why mobile wallet companies clocked 137 per cent growth within a year.

There are over 225 million smartphone users today and the number is set to grow phenomenally in coming years. The WhatsApp messaging app now boasts of 160 million monthly average users in India, which is the highest in any country worldwide. Indians by and large are known to adapt new technologies quickly. In urban areas, day-to-day services like paying bills for food, cabs, hotels, flight booking, shopping, entertainment or phone recharge can easily be done by using a mobile wallet. Going forward, people should be able to buy a car, an apartment or furniture by using a digital wallet.

The demonetisation has suddenly increased the number of people opting for mobile money manifold. We are seeing a massive increase in merchant sign-ups — both online and offline. Online merchants who were relying on cash-on-delivery need an easy-to-use and ubiquitous solution. For offline merchants and delivery persons, mobile wallets are a logical substitute for cash.

India now needs to tone up the infrastructure to support digital transactions so that mobile money awareness reaches rural areas. After all, good intentions backed with good rationale make for good governance.

I believe demonetisation is the most significant reform measure of Mr Modi’s tenure so far and an expeditious move to boldly counter the menace of black cash economy.

Considering that 80 per cent of Rs 17 lakh crores worth of currency in circulation is in high-value denominations, it is a major move — almost a reboot of the entire currency system. It could even become Mr Modi’s greatest legacy point, with long-term gains for the country.

Mrinal Sinha is chief operating officer at MobiKwik, a mobile wallet company