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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
