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INDIA MOVES TOWARDS DIGITAL ECONOMY AFTER DEMONETISATION
PROCESS
Dr. Satish Patel
Asst Professor, Centre for Studies in Rural Management, Gujarat Vidyapith- Randheja,
Dist. Gandhinagar-382620.
Original Research Paper
Management
1. Introduction
In present era the integration of technological aspect with socio-
economic platform is necessary for sustainable development. Now a
day the information communication technology is the central part of
development process. It assists the common man to solve their various
types of problems. It contributes to strengthen of productivity of the
people in relative elds.
ICT is such technological system that fulls the deciency of
communication between people and formal system or structure of
development. It is able to meet the gap of formal communication
system and help to people as it supports to bring creative environment
to run well the development process that ultimately affects the level of
living standard.
For the pu rpo se the technology s hou ld hav e reliability an d
effectiveness in the sense of speed, accuracy, transparency, and auto-
easy operational features. So the success and real usefulness of ICT is
depending on acceptability and good feelings towards get desired
benet or appropriate solution of problems.
2. Demonetisation
Indian government decided to demonetize the 500 and 1000 rupee
notes, these notes accounted for 86% of the country’s cash supply.
Demonetisation process and its impact on Indian economy has been
expected in incoming year.
1. Demonetisation is the process of
ŸTo divest of value.
ŸTo withdraw money from use.
ŸTo deprive of validity by legal methods and without marking the
stamps themselves.
2. The demonetisation move by the India would reduce the black
money and will country towards a digital economy with cashless
system will take some period.
3. The government’s goal was to eradicate counterfeit currency, ght
tax evasion, eliminate black money gotten from money laundering and
terrorist nancing activities, and promote a cashless economy.
4. Build up a cashless society in which purchases of goods or
services are made by electronic platform rather than with cash.
3. Digital India Programme
Digital India – A programme to transform India into digital
empowered society and knowledge economy
Ÿ Government laun ched Dig ital Ind ia p rogramme which is
transformational in nature and would ensure that Government
services are available to citizens electronically. It would also
bring in public accountability through mandated delivery of
government’s services electronically with Unique ID basis
specially AADHAR.
ŸDigital infrastructure, providing digital services, implementing e-
governance in an accessible manner and using technology as a
driver of change and growth in all sector including private and
public-private partnership.
ŸGovernment already prepared a gateway of an Aadhar, Jan Dhan
Yojana, Make in India and direct benet transfer has boost digital
economy and cashless transaction.
ŸThe government of India has stepped up in promoting and
upgrading several projects that are specically aimed at moving
towards a cashless transaction space in India as per requirement
for transparency.
ŸThe National Payments Corporation of India (NPCI) is also taking
steps to promote the common UPI platform which involves direct
transfer of money between two accounts through a mobile
application. Best practises for developing a common platform for
all as BHIM interface which will be boosted a digital economy in
nearest platform,
4. Scope of digital economy
ŸUnique Identication Number later renamed as Aadhaar number,
an initiative of Unique Identication Authority of India of the
Indian government to create a unique ID for every Indian resident
as centric part of economical transaction.
ŸAadhar was working on a common platform that could be used to
conduct transactions across banks. Even as a merchant would need
a smart phone, a customer can make payments with just the Aadhar
card number and one of his two biometrics–ngerprint.” Aadhar
Bank Linkage with account is almost 45 crore account ready with
ngerprint database and it will be expand nearest future.
ŸUse of the debit and credit cards and mobile or electronic wallets
are being pushed by government and private sectors, as part of the
move towards a cashless economy. E-commerce, m-commerce
portals and digital wallets have seen an unprecedented surge in
usage and the opening of new accounts. Their target this time is not
just the citizen but also the small merchant.
ŸThe more important thing is when the economy becomes formal,
In present era the integration of technological aspect with socio-economic platform is necessary for sustainable
development. Now a day the information communication technology is the central part of development process. It assists
the common man to solve their various types of problems. It contributes to strengthen of productivity of the people in relative elds. For the
purpose the technology should have reliability and effectiveness in the sense of speed, accuracy, transparency, and auto-easy operational features.
So the success and real usefulness of ICT is depending on acceptability and good feelings towards get desired benet or appropriate solution of
problems.
Demonetisation has certainly paved the way to cashless but it will take a much longer time to be total cashless. If the government will exercise
quality control and speed on infrastructure and services with best practices use of taxpayers money in the white economy all Indian's will benet.
ABSTRACT
KEYWORDS : ICT, Demonetisation, Digital Economy, Cashless, Payment,
Volume-7 | Issue-11 | November-2017 | 4.894ISSN - 2249-555X | IF : | IC Value : 79.96
INDIAN JOURNAL OF APPLIED RESEARCH
201
Aadhar status as on 30 April 2017
Total Population
(Projected 2015)
Numbers of
Aadhaar assigned
% Aadhaar
India
(All State/UT)
1,278,229,800
1,140,800,331
89.2%
0 < 5 Years Age
119,160,296
40,930,571
34.3%
5 < 18 Years Age
350,025,759
258,709,658
73.9%
>18 years Age
804,431,255
841,160,102
104.6%
when everybody’s nancial transactions are digitised. India is
going to go from data poor to data rich and that will make it more
and more difcult for people to do dishonest things or to be outside
the system.
5. Cashless Payment methods
There are some old and new techniques for cashless transaction
already exist and some are emerging with new concept and consulates
form.
a. Cheque: The cheque is a known and oldest methods of cashless
payment. The entire transaction done through cheque gets recorded
and there is a proof of payment. The clearance of cheque takes
additional time.
b. Demand Draft: Demand draft is another safest option to receive
payment from anyone as a cashless transaction. The clearance of DD
takes additional time.
c. Banking Cards: Credit card or debit card is another cashless
payment method. The usage of credit card and debit card is worldwide
now. The limitation of this payment method is an availability of swipe
card facility (PoS) at merchant end. After registering for E-wallet you
need to link your credit card or debit card with your E-wallet id. You
can use e-wallet for fund transfer or online shopping. It is a simplest
cashless method.
d. Aadhaar Enabled Payment System (AEPS): AEPS is one of the
best cashless payment methods. AEPS is like Micro ATM it uses
smartphone and a nger-print scanner for the transaction. In order to
use this facility, it is mandatory to link your Aadhaar card to your bank
account. You can use AEPS in order to perform transaction like
Aadhar to Aadhar fund transfer, Cash withdrawal, Cash deposit etc.
e. Mobile wallets: The next cashless payment method is a mobile
wallet. You do not need a debit card, credit card or internet banking
password for making payment using a mobile wallet. Just load money
in your wallet via IMPS and use it on the move. You can download
mobile wallet app from play store. Few examples of mobile wallets are
Paytm, PayUmoney, Oxigen, Lime, MobiKwik etc.
f. Prepaid Card: The next cashless payment method is a gift card.
Gift Card is a readymade card and can be purchased from a merchant or
from the bank. The gift card is loaded with a x cash amount you can
purchase any item from the specic vendor by using a gift card.
g. Internet & Mobile Banking: The third simplest method for the
cashless transaction is online transfer using NEFT or RTGS. In order to
do online money transfer, you need internet banking facility. Online
transfer using NEFT or RTGS is comparatively faster than cheque or
DD. Online transfer can be done from anywhere using internet facility
on desktop and mobile apps.
h. UPI: UPI is a mobile payment system which allows you to do
various nancial transactions on your smartphone. UPI allows you to
send or receive money using virtual payment address without entering
bank information. Merchants can enroll with banks to accept payments
using UPI. Like in the case of a PoS machine, the merchant would
require a current account with a bank to accept UPI payments. The
examples of few UPI Apps are SBI Pay, ICICI Pocket, Axis Pay, Union
UPI, PNB UPI, etc.
i. Government of India launched a BHIM UPI application which is
integrated solution of inclusive all bank together in one platform.
BHIM application developed by NCPI with currently linkage with
more than 30 banks and will towards holistic solution of above all
types of payments mode will be inclusive in one roof and centric with
Aadhar based nger print solution in future.
6. Statistics and Indicators
The move to electronic banking–through debit and credit cards, bank
transfers, Internet and mobile banking–will indeed accelerate. While
the use of cash for retail transactions was 95%, according to this 2013
report from McKinsey, a consultancy, it was 68% in 2016 is world
scenario, the Business Standard reported, quoting CLSA, a brokerage
group. That means it hopeful scenario seen in terms of positive
indicator for digital payment and towards digital economy.
I think India has to face a four indicators of expansion in India’s
cashless economy and the barriers they face
1. Growth in electronic bank transfers:
According to RBI data, October 2016 Reserve Bank of India data
stated that Bank transfers made through NEFT and RTGS system as
under over the same period.
(Transaction in million and Amount in billion)
2. ATMs and Point-of-sales (POS) :
According to RBI data, October 2016 Reserve Bank of India data
stated that 1.4 million POS terminals used to swipe debit and credit
cards and around 200,000 ATMs in October 2016.
3. Debit cards and credit cards rise over five year :
According to RBI data, Credit cards increased from 17.7 million in
2011 to 26.4 million in August 2016, Debit cards rose from 263 million
to 712 million over the same period.
ŸDebit cards rise 170%
Ÿcredit cards rise 50%
Debit cards are mainly used for cash withdrawals from ATMs in India;
only in urban areas are they used for cashless payments, as March 2016
government data conrm. Rs 25 lakh crore was withdrawn through
ATMs during the nancial year 2015-16 – 5.4 times more than PoS
transactions.
4. Mobile banking transactions :
Mobile payment refer to payment services operated under nancial
regulation and performed from or via a mobile device. Mobile
payment is being adopted all over the world in different ways. There
are ve primary models for mobile payments.
Ÿ Mobile wallets
ŸCard-based payments
ŸCarrier billing
ŸContactless payments (Near Field Communication)
ŸDirect transfers between payer and payee bank accounts
Here some statistics of India in terms of Mobile internet and total
Internet user mention below.
Finally, at the end of march-2017 RBI released a data on electronic
payment accordance with transaction values and volume as mention
below.
202
INDIAN JOURNAL OF APPLIED RESEARCH
Volume-7 | Issue-11 | November-2017 | 4.894ISSN - 2249-555X | IF : | IC Value : 79.96
RBI Data as on Oct-16
2011
2012
2013
2014
2015
2016
NEFT
Transaction
199
339
572
873
1611
1191
Amount
15377
25888
39920
55340
75986
85758
RTGS
Transaction
54
65
78
90
97
86
Amount
5194
6447
7260
7440
7996
7812
RBI Data
as on Oct-
16
2011
2012
2013
2014
2015
2016
ATM
87355
105784
141516
176410
193768
202801
Point of
Sale (POS)
618756
799702
1025732
1058642
1245477
1461974
2011
2012
2013
2014
2015
2016
Debit
Card
263796762
31443
6803
3725067
79
5000808
55
643191224
71246578
7
Credit
Card
17672337
18851
341
1868613
6
2036285
9
22748760
26378940
RBI Data as on
Oct-16
2012
2013
2014
2015
2016
Mobile internet
User
48
91
137
238
371
Internet User
(Total)
137
190
243
354
449
Month
Cards @ POS
(4 Banks
Data)
Mobile
Banking (5
Banks Data)
UPI
(8 non-banks
issuers Data)
Prepaid
Payment
Instruments
Unit*
Volume
Values
Volume
Values
Volum
e
Values
Volume
Value
s
Nov-
16
205.5
35236
72.3
124485
.3
91
59
1321
* Volume in million and values in crore, RBI
7. Need to improve a system
A. In urban India, 58% of people have access to Internet while Only
13% Indians in rural areas have Internet access. As many as 73%
of Indians cannot access the Internet reported India Spend on
December 3, 2016.
B. As on March 2016 Telecom Regulatory Authority of India India
has 342 million Internet users.
C. 15 4 million Ind ians have bro adband, speeds slower than
Bangladesh, China.
D. Another hurdle is the average time to load a page on a mobile
phone takes 5.5 seconds in India, compared to 2.6 seconds in
China, 4.5 in Sri Lanka, 4.9 in Bangladesh, according to this 2016
report by Akamai Technologies, a global content delivery network
services provider.
E. For a majority of banking applications, a smartphone is a
prerequisite.
F. In a cashless country, the complete control of transactions,
individual use of money, information about public monetary
assets, and interest rates are with the nation state and third party
providers.
G. Increase nancial inclusion of consumers, merchants and traders.
H. Remove mental barriers and change payment habits of consumers,
enterprises and public institutions towards greater use of digital
payments.
I. Better utilization of payment infrastructure and acceptance
network.
J. Mandate standards for security and effectiveness of digital
payments, expansion of availability and promote innovation.
K. Ensure payment neutrality through a free market and competition
in payments.
8. SWOT ANALYSIS
Cashless or Digital India interpreted on SWOT. We need to analyzed
the project based on SWOT is given below.
Strengths
ŸGeneral Awareness on eGovernance
ŸBasic IT Infrastructure available
ŸSignicant increase in political support
ŸCatalyzed movement towards citizen
ŸRight on time bound delivery of services
ŸSupplemented various eGov projects
ŸAdhar based Unique identity
Weaknesses
ŸLack of attainment in impact
ŸWeak and delayed released Standards and interoperability
ŸLow process of re-engineering
ŸLack of approach on implementation
ŸWeak monitoring and evaluation system
Ÿlast mile connectivity
ŸSub optimal use of Core IT Infrastructure
Opportunities
Ÿ Huge advancements in the Technology
ŸAdvent of the Cloud
ŸNew business models
ŸCapacity Building
ŸRadical process re-engineering
ŸStrong international presence
Threats
ŸLosing appeal for Transformation
ŸObsolete or inefcient eGov Projects
ŸA large number of islands of IT activity
ŸCompetition from other countries
ŸIndia could lose the opportunity to
Ÿleapfrog in the quality and nature of citizen
Ÿservices offered through eGov
9. Conclusion
Demonetisation has certainly paved the way to cashless but it will take
a much longer time to be total cashless. If the government will exercise
quality control and speed on infrastructure and services with best
practices use of taxpayers money in the white economy all Indian's will
benet.
A cashless society is a society where currency notes or cash money are
not used in monetary transactions. It is a hypothetical move or situation
in favour of alternative means of exchange. The present concept of a
cashless society or country is a completely new thing. Here cashless
transactions are made with the help of digital currencies like the
bitcoin. In a truly cashless society, legal tender (money) is exchanged
and recorded only in the electronic digital forms.
National Payments Corporation of India is the umbrella organisation
for all retail payment systems in India, which aims to allow all Indian
citizens to have unrestricted access to e-payment services. Through
cooperative efforts among consumers, businesses and the government,
the Indian society as a whole will gain tremendously by the increased
adoption of digital payments.
Cen tral go ver nme nts wou ld also be ne t from suc h cashl ess
transactions as it would allow central control of money supply. It
would be easier for government to monitor income tax paid by
individuals and proper payment of tax would strengthen the nation’s
economy. Cashless transactions would be helpful in the context of
negative global ination and quantitative easing. Going cashless
would also reduce the levels of corruption prevalent in the country.
Finally, moving towards Cashless Economy advantage gain are Cost
of handling cash reduces, Brings transparency, Help curb the creation
of black money and will increase the tax base and add to tax revenues.
REFERENCES
1. Reserve Bank of India website : https://www.rbi.org.in/
2. National Payments Corporation of India : www.npci.org.in/
3. http://businessworld.in/
4. http://economictimes.indiatimes.com/
5. http://www.investopedia.com/terms/d/demonetization.asp#ixzz4TSwHTbcy
6. http://www.gktoday.in/blog/digital-india-overview-nature-and-scope/
7. http://www.business-standard.com/
8. https://en.wikipedia.org/
INDIAN JOURNAL OF APPLIED RESEARCH
203
Volume-7 | Issue-11 | November-2017 | 4.894ISSN - 2249-555X | IF : | IC Value : 79.96
Dec-16
311
52224
70.2
136588
2
700
87.8
2125
Jan-17
265.5
48124
64.9
120666
4.2
1659
87.3
2099
Feb-17
212.3
39147
56.2
108000
4.2
1902
78.4
1874
Mar-17
225.7
41062
60.5
149923
6.2
2391
90
2148