Ushering in demonetisation is a masterstroke of Prime Minister Narendra Modi—killing several birds with a single stone—it was freedom at midnight. Most importantly, a strong and significant move/push towards cashless economy—something that has been part of boardroom debates for a long time. Since 2005, SKOCH has been an ardent votary of cashless economy, electronic tagging and tracking of funds and devolutions right at the local governance level upwards—I call it the New Economy—when we organised the 5th SKOCH Summit on the theme of Rural Delivery Systems and then 7th SKOCH Summit on Measuring Outcomes. It has been a recurring theme ever since.
Cash needs to be extinguished, wallets require encouragement and digital empowerment of a Digital Indian has to happen. Baby steps of yesterday have today assumed enormous proportions, in line with our advocacy for enhanced financial inclusion by not only opening bank accounts but also economic enablement of people to make these operational. This, coupled with penetration of user-friendly affordable cards (debit/credit) yet maintaining level playing field. PMJDY was the first move to convert cash into a bank account but at an elementary level. It is not surprising that over 25 crore Jan Dhan accounts have more than Rs.45,300 crore as account balance and only 23 per cent are zero balance. With the passage of time and advent of JAM trinity, I moved further to propound CAM trinity (Cloud, Aadhaar and Mobile), which to a great extent does away with even the need for cards and with over 1.05 billion Indians armed with Aadhaar have unique biometric identity and to a large extent with smartphones, India is poised to take a big leap towards extinguishing cash and step into the New Economy.
Fiscal prudence is the hallmark of any developing economy. India has to take interim measures to set the fiscal health of the nation right. We recently celebrated 25-years of Indian reforms. Looking back, we have come a long way. That gives us a solace if we compare with where we were in 1991. Alternatively, if corruption did not set in with India attaining the label of ‘cash economy’, slipping on the Transparency Index, we would have already had become a middle-income country with an economy size of over 10 trillion dollars, against merely two trillion dollars today! Correction started with Modi Government taking over the reins two-and-half years ago—Bankruptcy Code, Public Utility Dispute Resolution Bill, new FDI policy—and GST by April 2017 will change the rules of the game.
Smartphones and new payment systems will encourage digital spending, cash will lose currency and by the year 2020 online wallets and digital-payment systems will grow manyfold. Interestingly, the next level of growth will come when local mom-and-pop grocery stores start accepting digital payments. The pilots are already on with large FMCG players wherein consumers will receive competitive offers on the fly as they make the purchases using digital wallets. Governance, security, payments and economy will never be same again. A unique combination of vision, policy execution, perseverance aided by modern technologies—a hope that India voted for.