How prepared is India for a #cashless, digital economy?

Without being dismissive of the hardships and tragedies the nation has faced close to a month, let’s take a moment to look at the larger scheme of things – India’s preparedness to become a cashless digital economy.

The number one argument against India going cashless comes from the Internet connectivity issues, such as lack of dependable data connection across non-metros and villages. This is a schizophrenic interpretation from us, because when Reliance Jio announced that its network covers 18,000 cities and towns, and over two lakh villages, we cheered for it. 

As of today, over 330 million people have access to the Internet in India – larger than the population of the US – and ranks India second in Internet users after China. 

The Boston Consulting Group estimates that at present there are about 120 million Internet users in villages and this figure is projected to cross 315 million in the next two years. If the Internet is the foundation for building the digital economy edifice, I’d say we are laying it pretty strong.

Internet penetration argument aside, go bite a cookie if you know how to check your bank balance using USSD from feature phone (or a phone without a data plan). Just like how you check your prepaid phone’s validity or talk time using *111#, one can do banking, pay bills and more using similar technology. This requires no internet connectivity and works on any phone that has an active SIM card. 

The Karnataka government introduced “Mobile One” as early as December 2014, the multi-digital initiative gives the convenience of over 4,000 services, both state-owned and private, for its users to pay bills, check Income Tax returns and more. Check it out yourself, open you phone keypad, type *161# and press dial (or call) and see what happens. Pure magic! The point is, in the last two years, the initiative has seen transaction worth over Rs 26 crore. Now imagine if a similar service goes nationwide that links our bank accounts in back-end, Aadhaar for authentication and PAN for KYC verifications, it will be advancing pure smooth cashless economy across the country with no dependency on mobile Internet or the need for a smartphone. 

The government has demonetised high-value notes and has not abolished cash as a currency. Countries like Sweden are going aggressive on cashless economy to the extent of removing ATMs from bank branches, the interest paid on saving account is negative, so people are paying the bank to keep their own money and then dissuaded to not withdraw cash; quite a situation to be in. Between cashless and less cash, India can only opt for the latter if it desires the former.

Since the radical night of November 8, ramping up of infrastructure to support the digital economy is now happening as default than by design, but that’s nothing to complain about. Mobile wallet players have seen a windfall in gaining new users and unprecedented amount of transactions. All public sector banks and few private lenders have agreed to waive transaction charges on debit cards until December 31. Paytm’s mobile Point of Sale (PoS) through an app outgrows the need for a physical machine to swipe cards, though it comes with certain limitations and questionable security measures, nevertheless a great stop-gap solution until the lack of cash in hand storm calms down.

Outreach and initiatives at the grassroots level are the need of the hour. It is not uncommon to see news about how a homemaker or an elderly was conned online or at an ATM. Highly trained crooks running rackets to wipe an average Joe clean of his savings is nothing new to us, the recent Mumbai fake call centres scam did not even spare US citizens and NRIs. Cybercrime division curbing these scams and phishing emails are a cruel apathy similar to our bad roads and traffic woes.

Announcement by the Goa government to go completely digital by December 31 is ambitious, similarly the ICICI Bank announcing an initiative to digitise 100 villages in India is heartening; It better not be a PR stunt from both. The public-private partnership with citizen cooperation is another way to create impact at the grassroots level, the way we eradicated polio or conduct census by roping in teachers is commendable. A similar pragmatic approach has to be swiftly put in place to educate and welcome first timers to the digital economy and importantly, empower them to fend from being conned.

Change must begin at home

It is a shame that the state-maintained Taj Mahal’s entry fee still can’t be bought using any form of electronic payment, including debit cards or mobile wallets. The Central government’s bid to transform its procurement process starting from the office stationery to wind turbines to an Amazon-like online marketplace is an audacious bet, and it can certainly wait until we resolve the after effects of demonisation on the public.

While the e-marketplace model for procurement does reduce paper trail and is far easier than the current clumsy tender process, it is unclear how it will aid in mitigating kickbacks and corruption.

The successful rise of e-commerce in India can be partly attributed to two government functions, the Railways and the Income Tax (I-T) Department. The Railways gave us an early demonstration of what convenience is through its online Tatkal bookings, and the I-T Department by making it compulsory to file tax returns online for most people.

These two online experiences had a profound impact on nearly 4 crore people, who fearlessly keyed in their bank and PAN details online knowing they can rely on state-run portals for information security. 

A similar approach is needed where the government can influence, for example instead of having bank extension counters at colleges and hospitals, e-kiosks can be installed.

In the world of marketing, we say best campaigns are those which generates demand. And the best problem to have in business is when you have more demand than what you can supply. The demonetisation move is one of the most successful government campaigns, the moot point now is ‘order’ fulfilment - making those queues shorter and installing more digital payment touch points across the country. It is every entrepreneurs’ dream to have surplus demand and the government must quickly find ways to increase supply.

No debate whether the government had a plan before demonetisation, but it sure would have made a lot of difference if they had one.

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Sreeraman Thiagarajan is a digital marketing professional, he’s currently Vice President at Publicis Beehive. He tweets at @sree_raman. Views expressed are personal.

Column appeared on Sunday Spotlight, on Deccan Herald. Some modifications made here including title and footer.