Digital Inclusion In India: Steep Road Ahead


We could continue to argue about the merits and demerits of demonetisation by the Government but one aspect is surely heartening and that is the fact that as a nation we have started taking baby steps towards a digital and cashless economy. It is almost common practice today to see signs of Paytm and other mobile wallets in shops and even relatively low resource traders like the vegetable vendors are looking at creating some forms of digital payment gateways for their products. The Government on its part is seen encouraging digital payments at every crossroad. As per recent announcements, users can claim discount on buying fuel, railways tickets and pay toll digitally. Additionally settlement services for any single transaction up to Rs 2,000 will be exempt from tax on digital payment.

In fact as per the Finance Ministry, there is 40% rise in digital payments at petrol pumps post the demonetisation has resulted in significantly lower cash requirement. It is expected as the Finance Minister Jailtley said that, “the incentive scheme has the potential of shifting at least 30% more customer to digital means, which will further reduce the cash requirement of nearly R 2 lakh crore per year at the petrol pumps.” Currently the daily cash requirement at petrol pumps has come down by almost Rs 360 crore a day. About 4.5 crore people buy fuel resulting in total transactions close to Rs 1,800 crore a day.

However there are some concern areas that continue. Just as building more schools did not spike up literacy rates overnight, would it be correct to assume that just by creating ore channels of financial empowerment and inclusion, India would move towards digital inclusion that easily. Of the total 256 million Jan Dhan Account that have been opened thus far, 23% of these are empty and 10 million of them are held at the token Re 1.In fact only 33% of the account holders are ready to use the RuPay cards and the PIN activation procedure is also a huge hindrance in the absence of proper sensitisation and awareness programs conducted for the same.

In fact the Card acceptance infrastructure is also struggling to keep pace with the rate of growth of the Indian population. 2014 data indicates that there are 18 ATMs and 13 bank branches for every 100,000 adults in India. This in comparison to even other developing countries like Brazil stands in very poor steed. There about 129 ATMs and 47 bank branches fr the same number of adults there. Infact the number could get even more skewed if we conduct the urban vs rural comparison as only 18% of the country’s total ATMs are present in rural India.

The question therefore is would mobile wallets and schemes like USSD and UPI be able to bridge this huge gap? The Government surely needs to be nimble footed on these matters for the actual impact to come through.

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