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Can Indian Economy Really Become a Less-Cash or Even Cashless Society: 2024 and Beyond?

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Table of Contents

Should India Become A Less-Cash or Cashless Country?

How Much Cash is in Circulation in India?

What is the Government doing to make India a Less-Cash Society?

Can Indian Economy Become Cash-Less in 2024 and beyond?

Conclusion

India, a country with a rich tapestry of tradition and modernity, has been on a transformative journey towards being a cashless society since the unprecedented demonetization move in November 2016. Seven years after this landmark event, the landscape has evolved, and the question persists: Can the Indian economy emerge as a less-cash or even a truly cashless economy by 2024 and beyond? Read on and find out!

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Should India Become A Less-Cash or Cashless Country?

The question of whether the Indian economy should move towards being less-cash or even cashless society is nuanced. On one hand, digital transactions, led by UPI, have witnessed significant growth, reaching over 78 percent of total retail digital payments in May 2023. Experts project UPI’s share to rise to 90 percent by FY 2026–27. Also, the introduction of Central Bank Digital Currency (CBDC) has the potential to revolutionize digital transactions further.

However, the paradox emerges when we confront the substantial increase in cash circulation, especially in high-value transactions like property purchases. Despite the success of UPI in everyday transactions, cash still plays a vital role in big-ticket items. The survey underscores that 76 percent of property buyers in the last seven years had to resort to cash payments, indicating a persistent reliance on physical currency in certain segments.

The debate, over whether a less-cash or cashless Indian economy is more desirable, continues. While less-cash implies reduced dependence on physical currency, a cashless society envisions a complete shift to digital transactions. Striking a balance between convenience and security is crucial in determining the optimal trajectory for India’s evolving financial ecosystem.

Read on – Indian economy in 2024: Financial Predictions by Top Experts.

How Much Cash is in Circulation in India?

Despite significant strides in digital payments, a recent survey reveals a surprising trend – cash in circulation in the Indian economy has nearly doubled in the seven years since demonetization, reaching a staggering 33 lakh crore.

Notably, big-ticket transactions, especially in property, still involve substantial cash components, emphasizing the enduring role of physical currency.

While significant strides have been made in promoting digital transactions, evidenced by the success of UPI and other initiatives, the coexistence of a substantial cash economy poses challenges.

What is the Government doing to make India a Less-Cash Society?

The government’s commitment to steering India towards a less-cash society is evident in its multifaceted approach. Initiatives like demonetization, the United Payments Interface (UPI), and Direct Benefit Transfer (DBT) have played pivotal roles. The introduction of the Central Bank Digital Currency (CBDC) and the recent launch of e-RUPI highlight the government’s determination to foster digital transactions.

Demonetization: A Catalyst for Change

The demonetization drive in 2016 acted as a catalyst, pushing Indians towards digital transactions. The unexpected surge in the use of platforms like PayTm at the same time demonstrated the potential for a cashless Indian economy.

United Payment Interface (UPI): Transforming Transactions

The UPI has emerged as a game-changer, offering a seamless and cost-effective way for Indians to conduct digital transactions. Its widespread adoption, along with the rise of private players, has contributed to the acceleration of digital payments.

Direct Benefit Transfer (DBT): Targeted Welfare

DBT has not only streamlined the distribution of subsidies and benefits but also significantly reduced leakages. This has facilitated the penetration of digital banking into rural India.

Financial Reforms: GST and More

The implementation of the Goods and Services Tax (GST) has streamlined tax compliance and created a unified platform for businesses. This has contributed to the creation of a paperless and cashless transaction ecosystem.

Pradhan Mantri Jan Dhan Yojana: Financial Inclusion

The Pradhan Mantri Jan Dhan Yojana has played a pivotal role in bringing the unbanked population into the formal financial sector, laying the groundwork for a cashless Indian economy.

Bharat Net and India Post Payments Bank: Infrastructure Support

The Bharat Net project and the India Post Payments Bank have strengthened the digital infrastructure, ensuring widespread connectivity and access to financial services.

RuPay Card: Catalyzing Digital Payments

RuPay, with its low cost and international acceptance, has catalyzed digital payments, providing an alternative to global card networks.

E-RUPI: The Future of Digital Payments

The recent launch of e-RUPI marks a significant step towards reducing dependency on physical currency in Indian economy. This contactless digital payment solution could pave the way for the widespread adoption of CBDC.

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Can Indian Economy Become Cash-Less in 2024 and Beyond?

As the Indian economy mulls a cashless future, several opportunities and challenges arise.

Cost savings associated with reduced money printing, enhanced transaction security, and seamless traceability are among the benefits. However, challenges such as the persistent use of cash in specific transactions and the need for robust digital infrastructure must be addressed for a smooth transition.

While the Indian economy may not achieve complete cashlessness by 2024, the ongoing efforts, coupled with technological innovations, position the nation on a trajectory towards reduced cash dependence. While digital payments have gained traction in routine transactions, the dominance of cash in critical areas like property purchases remains a hurdle. Government initiatives, such as demonetization and the introduction of digital currency, showcase commitment to fostering a cashless ecosystem. However, bridging the gap between digital aspirations and on-ground realities, especially in larger transactions, requires targeted interventions.

A nuanced approach, addressing sector-specific challenges, will be crucial in navigating the journey of Indian economy towards a less-cash or even cashless one in the years to come.

Read on – Indian Economic Growth Story: The Contribution of the Smart Watch Market.

Conclusion

The Indian economy stands at the cusp of a transformative journey towards a less-cash or even cashless economy. The government’s strategic initiatives, coupled with technological advancements and changing consumer behaviors, signal a promising future. As the decision-makers of the nation explore through the opportunities and challenges, the vision of a truly cashless society in India appears imminent and inevitable.


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