Cashless Economy in India : Importance, Advantages & Disadvantages
Importance of Cashless Economy in India
To curb the circulation of fake bank notes, Mr. Narendra Modi, the honorable Prime Minister of India, suddenly announced during the beginning of second week of November, 2016, the scrapping of Rs.500 and Rs.1,000 notes in India with immediate effect. Soon after a few days of implementation of such policy, Mr. Narendra Modi came out with a new scheme to make India a cashless economy. The main objective behind such a move is to curb black money and circulation of fake currency notes in the Indian economy. Cashless economy is referred to the economy where no liquid money is used. All the transactions are carried out using plastic cards or by electronic means. A cashless transaction is nothing but electronic transaction of one’s money with the aid of internet banking, credit card, debit card, e-wallet, etc. One can shop, pay his/her bills, manage his/her finance at any place and at any time with the help of computer, smart phone or a tablet.
Pros of Cashless Economy (Benefits & Advantages)
1) It reduces the circulation of liquid money. Therefore the expenditure on printing currency notes and minting of coins will get reduced to a substantial extent.
2) cashless economy results in transactions taking place with white money. Therefore, the black money or parallel economy cannot be sustain for long.
3) Electronic gadgets are easy to handle and carry as compared to cash. One has some capacity to carry liquid money while it is easy to carry a smartphone or tablet for carrying out transaction of any amount.
4)Theft and burglary will almost get reduced to nil as they are quite impossible to execute if electronic money is used in the economy.
5) The illegal business activities in the society like drug dealings, human trafficking, money laundering, prostitution, etc. cannot be continued for a long time.
6) Banknotes and currencies are unhygienic as they carry germs. This is not the case with electronic gadgets.
7) Cashless economy facilitates enhancement of the tax base, as most of the transactions taking place in the economy can now be monitored by the government.
8) Cashless economy fosters digitization. It leads to the adoption of electronic gadgets by the residents of the country. It makes people tech savvy.
Cons of Cashless Economy in India (Drawbacks & Disadvantages)
1) Hacking and cyber fraud can affect the functioning of the economy as a whole. Strong security system in the online processing is required to prevent occurrence of such illegal activities for the benefit of the society and the government.
2) Taxes, surcharges, fees are associated will transactions which are carried out via electronic means. This thing has to be made liberal to make transactions cheaper for an individual.
3) The retired persons are going to face issues to transact via electronic means as they are generally not tech savvy like the youth.
4) Most of the poor people don’t have their bank accounts. Therefore carrying out cashless transactions is next to impossible for them.
5) If the economy is cashless, the banks have to surely undergo tough time. The administrative activities of the banks would be very complicated and voluminous.
The government of India is planning to make India a cashless economy very soon to address the issues of black money, fake currency notes, tax evasion, etc. No country in the world has reached the target of total cashless services. India as a developing country, has to address lots of issues to achieve the title of cashless economy.