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exchequer INR 500 crore annually –               Some of these challenges are gradually
               funds that could be channelized                  being addressed through efforts like
               towards social uplift initiatives.               opening of Jan Dhan accounts,

               At the same time, a study by the                 mushrooming of payment banks, rolling
               McKinsey Global Institute has                    out innovative solutions like BharatQR,
               estimated that emerging economies                and encouraging cashless transactions
               can grow by as much as $3.7 trillion in          through various awareness campaigns.
               value by shifting to digital payment             While demonetization brought about a
               platforms. Cashless payments spur                short term spike in digital transactions, it
               business growth as they enable much              showed an appetite and opportunity for
               higher value transactions. Thus, Indian          penetration of digital services giving a
               merchants can earn an additional 4-5             fillip to the government’s digital vision.
               percent simply by shifting to e-
               payments (this estimate includes the
               cost to the merchant of shifting to card         Learnings from across the borders
               based payments).                                 But to transform this moment to a
                                                                movement, there are miles to go. How
                                                                can India move more effectively down
               How to cross the chasm
                                                                the digital path? The roadmap can
               To bring this vision to fruition, there          become more clear if we look at the
               are a few interventions that are                 experiences of other countries. South
               needed. Policy implementation will               Korea sought to reduce its shadow
               play a big role and the government has           economy by offering citizens a tax
               to look at cascading the digital plan at a       incentive for switching to electronic
               granular level, ie. to the smallest rural        payments. People could claim tax
               bank branch.                                     deductions for purchases made using

               Public and private players in the                electronically traceable payments.
               financial sector need to work to build           Already at 70 percent cashless levels,
               acceptance and comfort levels amongst            the country is on a path to going
               the first-time entrants to the financial         coinless within three years.
               world. This could involve innovation in          This bears relevance for India which is
               communication and content to reach               in the midst of a drive to widen the tax
               out to non-English speaking                      net and increase direct tax revenues.
               communities or people with limited               The demonetization drive unearthed
               literacy.                                        INR 2 trillion in black money and
               And lastly, India needs robust                   brought over a million new taxpayers
               infrastructure in place to enable the            into the system!
               shift to digital. Thousands of India’s           In terms of widening the digital user
               villages are still unconnected and need          base, the smartphone holds
               access to telecom and mobile                     tremendous potential as a gateway to

               connectivity as well as equipment to             financial inclusion. Today there are
               handle e-transactions.                           over 1 billion mobile users in India of
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