Indian PM pushes for cashless society following a ban on high-value bank notes.
The Indian Prime Minister, Narendra Modi, is in a firestorm after the recent decision to ban 500- and 1000-rupee bank notes. Opponents to the decision are planning nation-wide protests, and are calling the ban a “political move made without preparation” in line with Modi’s propensity for “dhamaka politics” (politics aimed at seeking publicity).
In Modi’s monthly address to the nation, which was held on Sunday, he said that the government understands that the ban has affected millions of people, but defends the action anyway, saying that it is a measure to combat corruption, counterfeiting, and people with undocumented wealth.
Modi then urged the nation to begin moving toward a cashless society: “I want to tell my small merchant brothers and sisters, this is the chance for you to enter the digital world,” Modi said, encouraging the use of credit cards and mobile banking over cash. “It’s correct that a 100 percent cashless society is not possible. But why don’t we make a beginning for a less-cash society in India? We can gradually move from a less-cash society to a cashless society.” Modi suggested that tech-savvy youngsters should help the older generations in transitioning to digital payment methods.
Indian Prime Minister Narendra Modi
This may sound well and good on the onset, but the plan has serious flaws. There are some places where a natural trend towards cash-less transactions is already occurring. In Sweden for example, less than one fifth of transactions are done with cash (as of 2014). There, a push for a cash-less economy, while still difficult, may be possible. However, in India, 90% of transactions are still done with paper money, according to Credit Suisse. The smart phone boom and fall in mobile data prices have certainly helped boost digital payments, but to make a purposeful shift to digital only, or even ‘mostly’ digital, at this point seems impossible.