The Nation today woke up to a new age of Economics driven by Modi government’s decision to curb the highest currency notes in India. The flash announcement that broke overnight has created panic across all segments- not just the businessmen but also laymen who have kept the “illegal” currency for some personal use.
Well, the move may be applauded or criticized on many accounts. The motive is clear: the government wants to curb the flow of unauthorized cash within the country and across the border. Now, the crux of the matter is that decisions like these will lead to new trends emerging from the need to go transparent in transactions. Not surprisingly, it’s a wakeup call for citizens to tune to digital payment platforms, and a natural progression, it will also bring a windfall opportunity for digital payments and mobile payment industry.
It’s time countries like India curb currency transactions of higher denominations and insist on cheque/draft or digital transactions through authorized channels. A recent proposal from Arthakranthi Sansthan is being circulated in social media on account of its revolutionary suggestions. While proposing digital transactions for better transparency, the agency also calls for removal of all types of taxes so that people will be motivated to show all transactions in white. To offset the revenue loss, government could think of implementing a nominal tax for every transaction carried out through banks. The agency proposes a tax rate between 0.7% and 2% as tax, in addition to the normal transaction charges in the bank.
The move, undoubtedly, will be welcomed by mobile payments industry in India. Trupay, a UPI based bank to bank payment solution, says the move by the government will sensitize people about the superior modes of digital payments apart from cash.”
Says Rahul Gochhwal, co-founder, Trupay, “During the changeover period of phasing out old currency notes we really believe that a lot of people will move towards digital payments options due to curbs on roll out of new currency. A big chunk of population will move towards digital payments not out of choice but perforce with this bold move by Mr. Modi.”
Porush Singh, country corporate officer, India and Division President, South Asia, Mastercard, also accoladed Prime Minister’s move saying the ban on high value currency notes fundamentally addresses the underlying ‘cash engine’ that drives the shadow economy.
Singh added the move will enable further growth in the Indian economy by encouraging cashless transactions and reducing crime rate.
“The PM’s bold action and leadership is a critical step in positioning India to be a leader in the global cashless and digital economy movement,” he added. “Mastercard is committed to working with the government to provide the cashless solutions that combat corruption, create growth, and inclusion for all members of society.”
A recent report jointly released by Google and Boston Consulting Group reveals that digital payments market size in the country is expected to touch USD 500 billion by 2020, accounting for about 15 percent of gross domestic product (GDP).
According to the report, online shopping, payment of utility bills and buying movie tickets have emerged as the top three user activities. Now, with the government set to promote non-currency transactions across all prominent citizen activities, the figure is likely to surpass all expectations.
