The whole thing started out on the basic premise of corruption and black money. At least, that is what the hoi polloi were made to believe. Somewhere along the line, the crusade against black money has morphed into a rather arcane campaign for promoting a cashless economy. This, of course, can be a very long-term goal to which the current government cannot be held accountable, but can be progressively tracked on the basis of movement of cash-to-GDP ratio of the economy. The question is, why this mid-course change of primary objective of such a nation-wide project like demonetisation?
Now, as we go to press, out of 14 or 15 lakh crore of demonetised currency notes, upwards of 13 lakh crore, have been already safely deposited into banks, purportedly as white money, and it is likely that bulk of the remaining notes will also come into the banks, all as white money, by the December 30 deadline. If that were to happen, one can well judge the efficacy of this drive, which for all the secrecy seems to have miserably failed. Perhaps, therein lies the motivation to find a new, long term goal for demonetisation.
The subject matter of cashless economy is fascinating, and will almost always invoke a debate on digital infrastructure which enables cashless transactions. As we celebrate the growth of interconnected infrastructure, it is quite pertinent to talk about the width and depth of our digital network. There seems to be two major concerns expressed by experts - those of quality and safety, and both are equally important.
In the context of digital payments, quality means consistent connectivity and speed of data transfer. City dwellers, have a first-hand feel internet speeds and connectivity, and can at least express their opinion on the quality of network infrastructure, but what about the rural areas? When it´s a question of reach, issues of speed do not even come up. Among the top world economies, India is the lowest in terms of internet penetration at 19 per cent. In terms of banking and financial inclusion, although Jan Dhan Scheme has helped, there is still 60 per cent of our adult citizens who do not have bank accounts. In fact, India is home to about 20 per cent of the world´s unbanked adults.
Recently, we heard the Qualcomm CEO lament the absence of a hardware layer of security encryption in e-wallet applications in India, and haven´t heard a rebuttal from anyone. In fact, a leading e-wallet company has complained to the CBI about being cheated by a few customers. Breach of privacy and theft of identity data are not adequately governed by our legal framework. That our data security can be compromised, was also established when passwords of 2.5 million SBI debit card holders were hacked and stolen. As per reports by Kaspersky Lab and AKAMAI, India has the highest incidence of ransomware attacks, and is among the top five nations where web applications are attacked. Clearly, there´s a case for a step-change in strengthening our data security, before we can push our less educated, more vulnerable citizens into cashless transactions.
In the meantime, we have transgressed from black cash to cashless to´less cash´ in the space of the last few weeks, with remarkable speed. Hope we move as fast on net infrastructure and cybersecurity.