essay on cashless economy in india

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• Cashless India Essay

An Introduction to Cashless India

A cashless India is the first step towards making the dream of digital India a reality. In this cashless India essay, we will be talking about the meaning of ‘cashless’, the different alternatives for our monetary system, and the disadvantages and advantages of a country going fully cashless and digital in its economy. The following cashless India essay in English is for students studying in class 5 and above. The language here has been kept simple for a better understanding of young students. This essay on the cashless economy in India would enable young students to write an essay on the cashless economy in India on their own. 

As we know that cashless India is the new India and with the decision made by our honourable prime minister to demonetize money used previously, this concept of going cashless has become very popular. Although there are some disadvantages of going cashless, along with that there are more benefits as well. In this essay, you will know about everything that will help you to get better information about the concept of India going cashless. 

Essay on Cashless India

On the evening of November 8, 2016, at 8 P.M., Narendra Modi, the Prime Minister of India announced the demonetization of 500 and 1000 rupees notes in India. That historic decision had many reasons. One of the reasons was laying the stepping stone towards the dream of a cashless India.

The traditional form of monetary transactions happens with the exchange of physical hard cash between people. Cashless India is going to make it almost redundant. This idea has got a huge amount of push due to the ongoing COVID-19 pandemic, given the concerns with the exchange of physical cash. There are a lot of advantages to going cashless. Remember that everything has a positive as well as a negative aspect. It is not that there won't be any disadvantages of going cashless but the thing is that you tend to find the ways by which you can prevent these disadvantages from harming you. All that you need to do is be more careful. As we all know, prevention is always better than cure.

First of all, let’s understand the meaning of a cashless economy. A cashless economy is one in which the liquid transactions through the system happen with the exchange of plastic currency or through digital currency. ATM debit and credit cards are plastic currency and online payments come under digital currency. The advent of blockchain technology has redefined the meaning of a cashless economy through bitcoins. A decentralized system of finance is defined by the concept of bitcoins, but we are not focusing on that in this particular essay on cashless India. We are more focused to discuss why India needs to go cashless and what are the benefits that will come with India taking on this new change. This essay provides you with information on the advantages and disadvantages of the digital payment system also. It is not that you are not going to face any problem in online transactions, you must have heard that a coin has two sides and just like that, this topic of cashless India also has both pros and cons. Let’s move on to the pros and cons of a digital payment system.

We can see the Three Main Advantages of Cashless India.

Reduction of Black Money

Black money is the money that is earned but not accounted for in taxes. That money is hidden by people from paying taxes. This black money is an illegal instrument in an economy that is capable of reducing a government down to bankruptcy. The cashless economy will ensure there’s no black money since unlike hard cash digital money cannot be hidden. At least there is no way yet that could make the hiding possible. Digital money enables governments to track all transactions in an economy that helps keep the income authentic and transparent. The technology behind the digital economy has to be well updated and sturdy though.

Transparency

India has corruption inbred in its system starting from the ministerial level to the watchman level. And it exists due to the lack of transparency in our monetary system. In an economy that is as big as India, transparency is a huge issue. We have learned of scandals like the CWG or 2g scams or the Rafale Jet scams over the years, and these scams are a result of the lack of transparency in transactions. It’s a shame that a small cashless economy in India essay would never do justice to the topic since it will never be enough to write about all of the corruption scandals India has had since its independence. Corruptions of this scale could be brought down to a large extent if we could achieve that dream of a cashless economy throughout. And it's possible because the origin and endpoint of a transaction could easily be tracked in a cashless economy and that’s the biggest advantage.

There are Two Major Disadvantages of Cashless India.

Online Theft

With the improving technology every day, there’s a rampant increase in online cheating and fraud episodes. If the government is unable to achieve sturdy and not-possible-to-hack digital systems, in a country like India with a 135 crore population, it is completely impossible to make the economy cashless. People are still afraid of making big transactions online after watching the reports of online thefts on national news channels.

Infrastructure, or the Lack of it

Not just the government infrastructure, it requires infrastructure on an individual level too. A gadget or a smartphone, data connectivity, and electricity for charging the phones regularly are the basic requirements for making online transactions possible. These are privileges that exist mostly in urban India and most of rural India is still deprived of these privileges. The government should first fix this before even dreaming of making a cashless India possible.

The Government of India took the whole country by storm by announcing the demonetization on 8th November 2016. 500- and 1000-rupees notes were no longer legal tender. This move was aimed at getting rid of the black money in the economy that was largely used to fund criminals and terrorists and formed a parallel economy. The acute shortage of cash led to long queues outside ATMs and banks trying to withdraw cash or exchange notes. This was all to initiate the fruition of a dream of cashless India.

With the enormous amount of technological revolutions happening, it is close to impossible to find people without a smartphone in these times. Almost every citizen possesses a smartphone. The ease of transaction through interfaces like GooglePay or PhonePe or Paytm has never been more seamless than this. The Indian government has also introduced interfaces like UPI or Unified Payments Interface for hassle-free digital transactions that are fully cashless.

In recent years, we have been asked to be in very less contact with each other. This is because of the communicable diseases of Covid-19 that have seen an adverse effect throughout India. For this reason, online payments have recently been the most popular means of transaction. The money will directly get transferred to the account of the user from our account; all you need to do is just download the app that you can use for the transaction. 

In the end, the demonetization step became crucial to start a cashless economy in the country. It has paved the way towards an economy in India that is defined by greater transparency and convenience and ease in monetary transactions.

FAQs on Cashless India Essay

1. Which Country is fully cashless?

There are a lot of benefits of going cashless and most of the benefits are discussed over here. Now the world is more focused on how to go cashless as they are well aware of the advantages that they will have after going cashless. This is the reason that most of the countries are seeking some changes and making constant efforts to make their country cashless. Going cashless will improve technologies and will also increase your economy. That is also one of the main reasons why this world is more focused on going cashless. Sweden could achieve a near cashless economy in the world.

2. Name the different Digital Currencies in the world?

Just as in terms of cash, we have rupees or dollars or pounds and so on. In the same way, it is not like only one kind of digital currency is used throughout the whole world. There are different kinds of currencies that the world uses for online transactions. Litecoin, Bitcoin, Ethereum are some of them that were found to be in existence as of 2020. You need to have good knowledge about these currencies and then you can easily transfer the money. 

3. What are the apps that you can use to transfer money directly into another person's account in India?

In India going cashless is the new normal. People are using online money apps such as Google pay, Paytm, Payz app, PhonePe to make the transactions directly through their phone and bank account but when we talk about the currencies being used currently, Indians are more preferably using bitcoins as their online currency. India is now making efforts to go cashless and increase its economy.

4. How much is India cashless now?

In recent years, at the time of Corona, it was advised to people not to make contact with each other. It was at that time that the cashless India concept was created and the apps like Google Pay etc came into existence. The app was introduced in India before it came into use. In the covid time, most people used the cashless way of payment. The census has proved that 37% of India has not paid using cash since the Corona times.

5. Is it possible to have cashless India anytime sooner?

Given the regency usage and increased usage of the apps such as Google pay and Paytm and the increase in the number of vendors who have accepted this method of online payment, the more India can be cashless. The most difficult thing will be to make the people of India agree to use these online methods of payment and move toward increasing the other economy of India. India too can be cashless; it is just that we need to create awareness among people regarding this.

• IAS Preparation
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• Cashless Economy

Cashless Economy in India - UPSC GS-III Notes

When the transactions in an economy are not heavily based on the money notes, coins or any other physical form of money but are aided by the use of credit cards, debit cards and prepaid payment instruments, such an economy is called cashless economy.

The cashless Economy in India has been amplified with the Indian Government’s initiative of Digital India . This is a flagship programme with a vision to transform India into a digitally empowered society and knowledge economy.

The topic, ‘Cashless Economy’ is important for GS-III Indian Economy of the IAS Exam . This article will talk about it, the types of cash transfer modes, UPI and more.

Table of Contents:

Cashless Economy in India – UPSC Notes:- Download PDF Here

What is a Cashless Economy?

Cashless Economy can be defined as a situation in which the flow of cash within an economy is non-existent and all transactions must be through electronic channels such as direct debit, credit cards, debit cards, electronic clearing, and payment systems such as Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) in India.

To know the Difference Between RTGS and NEFT , visit the linked article

Highlights of Cashless Economy in India

• Post Demonetization , the Centre is making a big push for online and card-based transactions in the country to achieve its target of becoming a largely cashless economy.
• The rapid growth of e-payment startups in the country.
• Launch of Unified Payments Interface (UPI) to facilitate cashless transactions.
• The Covid-19 pandemic fueled a massive shift towards digital transactions in India aligning with the prime minister’s vision of a Digital India. In fact, according to the National Payments Corporation of India (NPCI) data, payments on UPI in June 2020 hit an all-time high of 1.34 billion in terms of volume with transactions worth nearly Rs 2.62 lakh crore.

Cashless Economy – Types of Cashless Modes and Payments

There are various cashless payment modes and these are mentioned below:

Mobile wallet: It is basically a virtual wallet available on your mobile phone. You can store cash in your mobile to make online or offline payments. Various service providers offer these wallets via mobile apps, which is to be downloaded on the phone. You can transfer the money into these wallets online using credit/debit card or Net banking. This means that every time you pay a bill or make a purchase online via the wallet, you won’t have to furnish your card details. You can use these to pay bills and make online purchases.

Plastic money: It includes credit, debit and prepaid cards. The latter can be issued by banks or non-banks and it can be physical or virtual. These can be bought and recharged online via Net banking and can be used to make online or point-of-sale (PoS) purchases, even given as gift cards. Cards are used for three primary purposes – for withdrawing money from ATMs, making online payments and swiping for purchases or payments at PoS terminals at merchant outlets like shops, restaurants, fuel pumps etc.

Net banking : It does not involve any wallet and is simply a method of online transfer of funds from one bank account to another bank account, credit card, or a third party. You can do it through a computer or mobile phone. Log in to your bank account on the internet and transfer money via national electronic funds transfer (NEFT), real-time gross settlement (RTGS) or immediate payment service (IMPS), all of which come at a nominal transaction cost.

The cashless economy in India is being promoted through various platforms and applications which provide easy methods of funds transfer and payments:

Cashless Economy – Prepaid Payment Instrument

The RBI classifies every mode of cashless fund transfer using cards or mobile phones as ‘prepaid payment instrument’ . They can be issued as smart cards, magnetic stripe cards, Net accounts, Net wallets, mobile accounts, mobile wallets or paper vouchers. They are classified into four types:

• Open Wallets : These allow you to buy goods and services, withdraw cash at ATMs or banks and transfer funds. These services can only be jointly launched in association with a bank. Apart from the usual merchant payments, it also allows you to send money to any mobile number linked with a bank account. M-Pesa by Vodafone is an example.
• Semi-Open Wallets : You cannot withdraw cash or get it back from these wallets. In this case, a customer has to spend what he loads. For example, Airtel Money/Ola Money is a semi-open wallet, which allows you to transact with merchants having a contract with Airtel/Ola.
• Closed Wallets : This is quite popular with e-commerce companies; wherein a certain amount of money is locked with the merchant in case of a cancellation or return of the product or gift cards. Flipkart and Book My Show wallets are an example.
• Semi-Closed Wallets : These wallets do not permit cash withdrawals or redemption, but it allows you to buy goods and services from listed vendors and perform financial services at listed locations. Paytm is an example.

Read in detail about the Fiscal Policy in India at the linked article.

Advantages of a Cashless Economy in India

• The main advantage of a cashless society in India is that a record of all economic transactions through electronic means makes it almost impossible to sustain black economies or underground markets that often prove damaging to national economies. This reduces the chances of black money entering the system. It is also much riskier to conduct criminal transactions. An economy that is largely cash-based facilitates a rampant underground market which abets criminal activities such as drug trafficking, human trafficking, terrorism, extortion etc. Cashless transactions make it difficult to launder money for such nefarious activities.
• Circulation of Fake Currency notes can be curbed.
• Increase Tax base: It is difficult to avoid the proper payment of due taxes in a cashless society, such violations are likely to be greatly reduced. The increased tax base would result in greater revenue for the state and greater amount available to fund the welfare programmes.
• Digital transactions bring in better transparency, scalability and accountability.
• Digital transactions are convenient and improve market efficiency
• It will eliminate the risks associated with carrying and transporting huge amounts of cash
• The cashless economy will reduce the production of paper currency and coins. This will save a lot of production cost in turn.
• A lot of data transfer happens due to the cashless transaction. This data will help the government plan for future expenses such as housing, energy management, etc from the pattern of the data transmission.

Challenges in transitioning to a Cashless society

• Acceptance infrastructure and digital inclusion: Lack of adequate infrastructure is a major hurdle in setting up a cashless economy. Inefficient banking systems, poor digital infrastructure, poor internet connectivity, lack of robust digital payment interface and poor penetration of PoS terminals are some of the issues that need to be overcome. Increasing smartphone penetration, boosting internet connectivity and building a secure, seamless payments infrastructure is a prerequisite to transition into a cashless economy.
• Financial Inclusion – For a cashless economy to take off the primary precondition that should exist is that there should be universal financial inclusion. Every individual must have access to banking facilities and should hold a bank account with debit/credit card and online banking facilities. Read more about Financial Inclusion in the linked article.
• Digital and Financial Literacy – Ensuring financial and digital inclusion alone are not sufficient to transition to a cashless economy. The citizens should also be made aware of the financial and digital instruments available and how to transact using them.
• Cyber Security – Digital infrastructure is highly vulnerable to cyber-attacks, cyber frauds, phishing and identity theft. Off late cyber-attacks have become more sophisticated and organised and poses a clear and present danger. Hence establishing secure and resilient payment interfaces is a prerequisite for going cashless. This includes enhanced defences against attacks, data protection, addressing privacy concerns, robust surveillance to pre-empt attacks and institutionalised cybersecurity architecture.
• Changing habits and attitude – Indian economy functions primarily on cash due to lack of penetration of e-payment modes, digital illiteracy of e-payment and cashless transaction methods and thirdly habit of handling cash as a convenience. In this scenario, the ideal thing to do is to make people adopt e-payments in an incremental fashion and spread awareness to initiate behavioural change in habits and attitude.
• Urban-Rural Divide – While urban centres mostly enjoy high-speed internet connectivity, semi-urban and rural areas are deprived of a stable net connection. Therefore, even though India has more than 200 million smartphones, it is still some time away for rural India to seamlessly transact through mobile phones. Even with regard to the presence of ATM’s, PoS terminals and bank branches there exists a significant urban-rural divide and bridging this gap is a must to enable a cashless economy.

To understand the Digital Divide in India , candidates can visit the linked article. This will also give them a brief idea of the areas of improvement to make India a cashless economy.

Is India Ready for a cashless economy?

The difficulty in going digital is exemplified by the data on debit card usage — over 85% (in volume) and 94% (in value) of all debit card usage is at ATMs for the purpose of withdrawing cash. The principal purpose for cards in an Indian context is thus a means to withdraw cash. The exponential growth in debit cards (over 600 million) is a direct consequence of the financial inclusion drive that led to the opening of over 170 million bank accounts. Though the move put plastic money into the hands of millions, effectively it has only shifted cash withdrawals from banks to ATMs, which was not quite the intent.

India’s Cash to GDP ratio:

As calls for going cashless grows louder in India, a key challenge being faced at the global level is to check the continuing rise in the total value of the currency in circulation and its share in the overall GDP , a trend particularly seen in the US, Switzerland and Euro area.

Such a continuing rise in the circulation of currencies for economic activities could well be a major impediment in the transformation to a cashless and digital economy.

India’s cash to GDP ratio — an indicator of the amount of cash being used in the economy — is around 12 to 13%, which is much higher than major economies including the US, the UK and Euro area but below that of Japan (about 18%).

Cashless Economy in India & The Challenges ahead

Typically in India, a cashless economy may take a bit longer to be adaptable. The challenges with regard to the same have been discussed below:

• A large part of the population does not have access to debit cards and smartphones, which is why they prefer to make transactions in cash
• The maximum population uses debit cards to withdraw money rather than paying directly through it
• People are not entirely aware and educated about the cashless methods of payment
• As per the survey and data collected, only 26% has access to the internet and choose online payments as an option for transactions
• Making the people aware of the privacy and security under cashless transactions is another challenge for the government. As the cashless economy in India is also taking time to recover as people do not trust the privacy terms of the online portals, platforms and applications

Penetration of Mobile Accounts

Cashless Economy and Government Initiatives

• Paytm had witnessed 5 million daily usage post demonetisation as opposed to their average transaction of three million. It also saw a 700% increase in the overall traffic and a 1000% increase in the amount of money added to its account in the first two days of post-demonetization. Ola Money too saw a 1500% increase in its e-wallet.
• Payment service providers (PSPs) to provide the interface between the payer and the payee. Unlike wallets, here the payer and the payee can use two different PSPs.
• Banks will provide the underlying accounts. In some cases, the bank and the PSP may be the same.
• NPCI will act as the central switch by ensuring Virtual Payment Address (VPA) resolution, affecting credit and debit transactions through IMPS.
• Direct Benefit Transfer (DBT):  It is a scheme that was launched by the Government of India to transfer the benefits and subsidies of various social welfare schemes like LPG subsidy, Old Age Pension, Scholarship, MGNREGA , etc. directly to the bank account of the beneficiaries. This allowed for the penetration of digital banking into rural India.
• The Centre has set up a committee headed by NITI Aayog CEO Amitabh Kant, to formulate a strategy to expedite the process of transforming India into a cashless economy.
• The panel is tasked with identifying various bottlenecks that are affecting access to digital payments.
• The panel will engage regularly with all stakeholders – Central ministries, regulators, state governments, district administration, local bodies, trade and industry associations to promote adoption of digital payment systems.
• The idea is to establish and monitor an implementation framework with strict timelines to ensure that nearly 80% of the transactions in India moves to the digital-only platform
• The committee will also try to estimate the costs involved in various digital payments options and oversee the implementation of these measures to make such transactions between the government and citizens cheaper than cash-based transactions.
• Pradhan Mantri Jan Dhan Yojana , one of the biggest financial inclusion initiatives in the world, was launched in 2014. It is a national mission on financial inclusion which has an integrated approach to bring about comprehensive financial inclusion and provide banking services to all households within the country. This scheme ensures access to a range of financial services like availability of basic savings, bank accounts, access to need-based credit, insurance and pension. It has played a significant role in the opening of bank accounts for the poor.
• The terms of reference of the committee include identifying global best practices for implementing an economy primarily based on digital payments and examine the possibility of adopting these global standards in the Indian context.
• The panel will also outline measures for rapid expansion and adoption of the system of digital payments like cards (Debit, Credit and pre-paid), Digital-wallets/ e-wallets, internet banking, Unified Payments Interface (UPI), banking apps, etc. and shall broadly come up with the roadmap to be implemented in one year.
• Ratan Watal panel on digital payments

The panel, headed by former finance secretary Ratan Watal, was constituted in August to suggest ways to encourage India’s movement towards a cashless economy.

Way Forward

India must learn from other countries in the developing world, which have managed to reduce their dependence on cash even while bringing in more people in the folds of the formal banking system. Kenya has been a well-documented success story, where mobile money has spread much faster and deeper than in India. Kenyan households with access to mobile money were able to manage negative economic shocks (like job loss, death of livestock or problems with harvests) better than those without access to mobile money.

The path forward is clear:

• Invest in building the required financial and digital infrastructure
• A nationwide financial and digital literacy campaign accompanied by a medium-term strategy to improve access to, and awareness of, electronic payments. Targeted financial education programs can improve financial skills and credit management, and increase account ownership.
• the government must undertake the herculean task of changing attitudes towards digital payments among customers and merchants
• Put in place all necessary cybersecurity measures

Cashless Economy – What is United Interface Payments (UPI)?

How to Approach the topic ‘Cashless Economy in India’ for UPSC

• Economics – Learn about UPI, Payments Modes etc.
• Current Affairs – Check on important editorials related to the Indian economy.

General Studies III:

• Indian Economy
• Cashless Economy – a probable essay topic

Practice Questions:

• Which of the following committees dealt with digital payments?
• Urjit Patel committee
• Bimal Jalan committee
• Ratan Watal committee
• Nachiket Mor committee
• Critically Discuss the benefits of India transitioning into a cashless economy. Does India possess the required prerequisites?

Frequently Asked Questions on Cashless Economy in India

Q 1. what is cashless economy and is india ready for cashless economy, q 2. how is cashless economy beneficial.

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Cashless Economy: Objectives, Importance, Impact on Indian Economy, Advantages and Disadvantages

Updated on : May 21st, 2024

A cashless economy prioritises digital transactions over physical cash. This system, driven by credit/debit cards, mobile wallets, and online transfers, aims to streamline financial processes, curb black money circulation, and boost financial inclusion. For India, a cashless economy holds immense importance, as it holds the promise of greater transparency, improved tax collection, and a more robust digital infrastructure.

However, challenges like digital literacy gaps and infrastructure limitations necessitate a balanced approach to evaluate its advantages of convenience and security against potential drawbacks of accessibility and cyber risks. 

What is Cashless Economy in India?

A cashless economy refers to a system where digital transactions have taken completely over physical cash. Instead, digital channels such as debit cards, credit cards, internet banking, mobile wallets, electronic fund transfers and digital currencies are used to carry out day-to-day transactions. 

In India, the government has made significant efforts to promote this transformation, aiming to reduce corruption, enhance transparency, and encourage financial inclusion for all citizens, particularly in rural areas. The growth of fintech institutions, rapid digitalisation, smartphone penetration and financial innovations in India are transforming the country into a cashless economy. 

Objectives of a Cashless Economy

The primary objectives of a cashless economy are to:

• Promote financial inclusion
• Enhance transparency
• Reduce black money circulation
• Combat corruption, and
• Ensure convenient and secure transactions.

Such a system aims to provide digital infrastructure, educate the population on digital literacy, and reduce dependency on traditional banking channels.

Importance of Cashless Economy

A cashless economy holds immense significance by facilitating easier cross-border transactions, reducing overhead costs, promoting a more robust and efficient tax collection system, and stimulating economic growth. Additionally, it encourages financial innovation, enables targeted financial assistance, and improves overall economic resilience.

History of Cashless Economy

The concept of a cashless economy traces back to the advent of advances in banking and the widespread adoption of credit cards and online payment systems globally. However, in India, the demonetisation drive in 2016 played a crucial role in accelerating the country's shift towards a cashless economy, as people were struggling to get physical money from banks and thus started using digital mediums for day to day transactions.  

Following the demonetisation drive, India saw the launch of UPI (United Payments Interface) as a secure and complete free payment system. It also led the growth of Financial technologies companies like Paytm, Phone Pay, and etc.  

How Does a Cashless Economy Work?

A cashless economy relies on digital payment methods such as mobile wallets, debit/credit cards, Unified Payments Interface (UPI), and internet banking. These mechanisms allow individuals and businesses to transfer funds electronically, eliminating the need for physical cash. Secure encryption, authentication, and authorised financial intermediaries ensure a smooth and reliable transactional experience.

Is India Ready for a Cashless Economy?

India has made significant strides towards a cashless economy, evident from the rapid increase in digital transactions and the government's push for digitisation. However, challenges such as inadequate digital infrastructure and limited digital literacy still exist, which need to be addressed for a complete transition.

Different Types of Cashless Modes

A cashless economy offers various modes of digital payments, including mobile wallets, UPI, internet banking, NFC-based payments, and QR code scanning. Each mode caters to different preferences and requirements, ensuring convenience, security, and accessibility in conducting financial transactions. Some of the different modes of cashless transactions are as follows:

• Mobile Wallet:  A virtual wallet accessed via smartphone that acts as a payment gateway for transactions, eliminating the need for cards.  
• Plastic Money:  Cashless payment method with debit, credit, and prepaid cards, in physical and virtual forms. It reduces the use of paper currency, tracks history, and minimises reliance on cash.
• Net Banking:  Transfers money from one bank account to another via RTGS, NEFT, or IMPS. Widely used and cost-effective.

Advantages and Disadvantages of Cashless Economy

Advantages .

A cashless economy brings advantages like enhanced transparency, reduced black money circulation, improved convenience, and increased economic growth. Some of the advantages of a cashless economy are as follows:

• A cashless society has the main benefit of leaving a record of all transactions made through electronic means. This makes it extremely difficult to maintain black economies or underground markets that can harm the nation. This reduces the likelihood of black money entering the system and makes it more risky for criminals to conduct transactions.
• An economy that is predominantly cash-based fosters a rampant underground market that encourages criminal activities such as drug trafficking, human trafficking, terrorism, and extortion, among others. Digital transactions make it harder to launder money for such nefarious activities.
• The circulation of fake currency notes can be curbed through a cashless society.
• In a cashless society, it is difficult to evade tax payments, and such violations are greatly reduced. An increased tax base would result in greater revenue for the government and more funds available to finance welfare programs.
• Digital transactions bring about better transparency, scalability, and accountability.
• Convenient and efficient, digital transactions can improve market efficiency.
• The risks associated with carrying and transporting large amounts of cash can be eliminated through a cashless economy.
• The production cost of paper currency and coins can be saved by reducing the production of these items through a cashless society.
• A lot of data is transferred due to cashless transactions. This data can help the government plan for future expenses, such as housing, energy management, and others, based on the pattern of data transmission.

Disadvantages

However, cashless transactions also come with disadvantages such as security concerns, cyber threats, a digital divide, and the potential exclusion of vulnerable segments of society. The disadvantages of a cashless economy are discussed below:

• The rise in online transactions has led to an increase in ease of use for consumers. However, cyber security has become a major concern as the rise of digital payment methods has opened new avenues for online fraud. 
• Currently, there aren’t enough strong laws and legal processes in place that can help prevent online fraud. This coupled with the risk of data theft, can lead to massive security breaches for banks and uncover the financial information of thousands of users.
• The convenience of cashless transactions can lead to overspending by people and enterprises, especially for the younger population, which can eventually lead to a significant increase in unnecessary debt. 
• Identity thefts are on the rise due to the lack of financial knowledge among individuals, causing them to lose confidential information and hard-earned money.
• In India, financial illiteracy and the reluctance to transition to cashless transactions remain the biggest barriers. The internet and smartphone penetration in the country is still catching up. Switching from a cash-based to a digital medium can be a challenge for people who require a deeper financial understanding.

Impact of Cashless Transaction on Indian Economy

The adoption of cashless transactions in India can have significant impacts on the economy, such as reducing the informal sector, improving tax compliance, enabling targeted subsidies, and fostering financial inclusion. However, challenges like data privacy, infrastructure requirements, and security need to be addressed for sustainable growth.

Cashless Economy Success or Failure

The success of a cashless economy hinges on careful consideration of its objectives, addressing technological and infrastructural challenges, and ensuring that vulnerable sections of society are not excluded. With continuous efforts to enhance digital infrastructure and promote financial literacy, India has the potential to make significant progress in its cashless journey.

Frequently Asked Questions

A cashless economy relies on digital transactions instead of physical cash for conducting financial transactions.

Going cashless can bring many benefits such as increased transparency, reduced corruption, enhanced tax collection, and economic growth.

No country has achieved a fully cashless economy yet, but countries like Sweden, Canada, and the UK are leading in this transformation.

India has made progress but still faces challenges in terms of digital infrastructure and the digital literacy of its population.

The exact percentage of the cashless economy in India varies but has been steadily increasing, especially in urban areas.

India aims to reduce corruption, increase financial inclusion, enhance transparency, and improve the efficiency of financial systems.

Cashless payments stimulate economic growth by reducing transaction costs, promoting tax compliance, and enabling financial inclusion.

About the Author

I am a curious person, and Finance is at the top of my list of interests. With more than 5 years of experience in fintech, I am an expert in lending, investment and personal finance. I believe the Devil lies in details, so I dig a lot before writing anything and armed my writing pieces with figures and facts. Read more

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Cashless Economy: The Role Of Digital Payments In India

India’s digital landscape has experienced massive growth since 2020. The reduced costs of data access and affordable smartphones have played a significant role in internet penetration within urban and rural populations. By 2030, it is projected that  one billion consumers  in India   will have access to the Internet. Around 839 million Indians will become regular smartphone users and by 2026, Indian households will make over 50% non-cash transactions. As more consumers engage and transact digitally, both consumers and businesses will increasingly become part of the cashless economy. 

These projections present a massive opportunity for businesses in eCommerce, retail, hospitality, and other sectors. They will now be able to reach newer demographics, accept digital payments, and grow their business digitally.

In this blog, we delve into India’s shift to a cashless economy, its future impact, and the potential for businesses to leverage this vast opportunity to accelerate growth. 

What is a cashless economy? 

A cashless economy is, essentially, an economy that has transitioned from one where transactions primarily happen in cash to completely facilitate digital payments across industries, entities, and business and consumer segments. 

India’s journey to becoming a cashless economy was expedited with the introduction of the Unified Payments Interface (UPI) system in 2016. The arrival of UPI enabled consumers and businesses to make payments and facilitate money transfers instantly and securely in a cost-effective manner. 

Consumers and businesses are now shifting to digital payments for several reasons, as follows:

It has become a necessity 

Worldwide lockdowns and disruption of the supply chains during the pandemic of 2020 made it necessary for consumers to shop online and make digital payments. 

While for many, this transition started out as a need, through this experience, they were able to discover the various benefits of digital payments and become digital-first consumers. 

Larger market access with a cashless economy

Online shopping opens up access to a whole new variety of products and services which consumers are unable to find in the neighbourhood. They can reap the benefits of discovering discounts, offers, rewards, miles, and other benefits through digital payments. 

Multiple payment modes 

Consumers do not need to make multiple trips to the bank to remove cash. They can, instead, leverage multiple digital payment modes at their convenience.

Advances in technology enable businesses to simplify the shopping process by introducing tools like QR codes and payment modes such as UPI, net banking, debit cards, and credit cards.

They can also access features such as Buy Now, Pay Later, and Equated Monthly Installments (EMIs), thus unlocking easy credit options in their shopping journey.  

No need for a digital footprint 

Businesses no longer need to have a website or app to facilitate shopping. They can serve a unique payment link directly to customers on the channel of their choice, from social media platforms to messaging apps and email, and collect payments instantly and securely.  

Key challenges with digital payments in a cashless economy

While such innovations exist, not all businesses have made the transition to a cashless economy. However, consumer expectations continue to rise, and those businesses which cannot keep pace with digital payments stand to will lose market share. 

For instance, consumers today are more likely to buy a product or service from a company, which enables them to leverage the payment mode they are most comfortable with. Credit card holders, for instance, are resistant to going back to net banking.

On the other hand, users of wallets may not prefer debit cards. Customers tend to get comfortable with one or two modes and stick to these options. 

Today, consumers are also engaging in multiple channels, such as social media, social messaging apps, and chatbots. However, many businesses are not equipped to turn these channels into point-of-sales.

Even though the technology is available, they are yet to put it in place for their business. In the process, they lose out on market share by not capitalizing on these customer touchpoints. 

How to facilitate secure, versatile digital payments 

Facilitating seamless payment experiences is one of the most important stages of the entire consumer workflow designed by businesses. Today, companies can integrate a payment gateway, a user-friendly network which facilitates smooth digital payments between customers and businesses.

A superior, innovative payment gateway must come with the following features: 

• It must offer the highest level of payment security and reduced potential for any data breaches 
• It must facilitate multiple payment modes such as credit cards, debit cards, UPI, mobile wallets, and net banking. 
• The UPI autopay feature , in alignment with Reserve Bank of India (RBI) guidelines, enables recurring payments, which is especially relevant for any subscription business. 
• A superior payment gateway must be able to offer customers options such as Buy Now, Pay Later, and popular credit options.
• It must offer affordability options such as Equated Monthly Installments (EMIs), along with an EMI calculator, as well as the “No credit” option.  
• Companies with no website or app can generate a unique, one-time payment link to facilitate payments via messaging apps and social media. This feature is also useful for customers who prefer to shop within their channel of choice rather than visit an app or website. 
• Businesses must be able to generate custom branded pages, which usually inspire higher trust in consumers. 

To conclude 

No matter how good a company’s services or products are, in a cashless economy, customers will always prioritize a high-quality, digital user experience. The payment experience will play a major role in helping companies convert traffic into sales and reduce cart abandonment numbers.

Those companies investing in a contemporary payment gateway, which factors all consumer needs, can pave the way to enter the cashless economy and build a competitive advantage. 

At Plural by Pine Labs, we provide a comprehensive online payment gateway, which comes with a wide range of features such as multiple payment modes, UPI autopay, Buy Now Pay Later, the EMI feature, and custom branded pages. 

Plural also enables the  easy creation of Plural links , which facilitate seamless payment via SMS, messaging apps, and social media. Today, a network of over 150 Croma stores across 40 plus cities  accept cashless payments via this innovation. Croma witnessed an average of 188% quarter-on-quarter growth rate for pay-by-link.

Plural’s Affordability Suite, offered both online and offline, has also triggered growth, with over 70% of Croma’s transactions now being routed through Plural’s gateway using EMIs. Plural Links can be shared via WhatsApp, SMS, email, Instagram, and other social media platforms. 

To learn more about Plural Gateway, contact us. 

Plural by Pine Labs has received an in-principle authorization from the Reserve Bank of India (RBI) to operate as a Payment Aggregator. 

Amrita Konaiagari is a Marketing Manager at Plural by Pine Labs and Editor of the Plural blog. She has over 10 years of marketing experience across Media & Tech industries and holds a Master’s degree in Communication and Journalism. She has a passion for home décor and is most definitely a dog person.

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Essay on Cashless India

Students are often asked to write an essay on Cashless India in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Cashless India

Introduction.

Cashless India refers to a scenario where the flow of cash within an economy is non-existent and all transactions are done digitally.

Benefits of Cashless India

However, it also poses challenges like the risk of cyber-crime, need for internet connectivity, and digital literacy.

Despite these challenges, with proper measures, a cashless India can lead to a transparent and efficient economy.

250 Words Essay on Cashless India

Introduction to cashless india.

India is rapidly advancing towards becoming a cashless society, a society where financial transactions are not conducted with money in the form of physical banknotes or coins, but rather through the transfer of digital information. This shift is fuelled by the rapid penetration of internet-based services and the proliferation of smartphones.

Driving Forces Behind Cashless India

The demonetization initiative of 2016 acted as a catalyst in the transition towards a cashless economy. The government’s push for digital payments, including the introduction of UPI, mobile wallets, and digital banking, has further accelerated this transition. The objective is to reduce dependency on cash, which is often associated with black money and corruption.

A cashless society offers numerous benefits. It promotes transparency, reduces the risk of money laundering and illegal activities, and enhances the ease of conducting financial transactions. It also aids in financial inclusion, enabling even the most remote and rural parts of the country to participate in the economy.

Challenges in the Path of Cashless India

However, the journey towards a cashless India is fraught with challenges. These include digital illiteracy, cybersecurity threats, and the lack of reliable internet connectivity in remote areas.

500 Words Essay on Cashless India

The concept of cashless india, the push towards cashless transactions.

The drive towards a cashless India gained momentum after the Indian government’s decision to demonetize high-value currency notes in November 2016. This move was aimed at curbing black money and promoting digital transactions. Following this, the government introduced various digital platforms like UPI (Unified Payments Interface), BHIM (Bharat Interface for Money), and digital wallets like Paytm, PhonePe, which have made online transactions seamless and efficient.

Benefits of a Cashless India

A cashless India offers numerous benefits. Firstly, it aids in curbing corruption and black money as all transactions are recorded, making it difficult for illegal transactions to go unnoticed. Secondly, it promotes financial inclusion by bringing the unbanked population into the formal banking system. Thirdly, it is convenient as it eliminates the need to carry cash, reducing the risk of theft or loss. Lastly, it can lead to significant cost savings in the long run, as the cost of printing, storing, and transporting physical currency can be avoided.

The Future of Cashless India

The future of a cashless India looks promising, but it requires a multi-pronged approach. Increasing digital literacy, improving internet connectivity, and strengthening cybersecurity measures are crucial. Also, the government and financial institutions must work together to build trust among the public in digital transactions.

If you’re looking for more, here are essays on other interesting topics:

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India Towards A Cashless Economy

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Essay on Cashless India

Cashless India is a mission launched by the Government of India led by Prime Minister Narendra Modi to reduce dependency of Indian economy on cash and to bring hoards of stashed black money lying unused into the banking system. The country embarked upon this transition to a cashless economy when the government took the revolutionary step of demonetization of old currency notes of Rs 500 and Rs 1000 on November 08, 2016. This move was targeted at the fake currency circulating in Indian market and the black money that somehow escaped the radar of tax authorities.

Post demonetization acute shortage of currency in Banks and long queues outside ATMs, gradually turned people towards digital transactions, one of the prime requirements under cashless India. If the government succeeds in providing secure and fast digital payment methods to the consumers and merchant establishments across the nation, then the dream of India becoming a completely cashless economy will materialize.

Long and Short Cashless India Essay in English

We are here providing a variety of long and short essay on Cashless India to empower the students with ready material available online in different word length – in 100, 150, 200, 250, 300 and 400 words.

These Cashless India Essay written in a simple language will help the students choose any one as per their requirements.

After going through these essays you will understand the concept of cashless India and its benefits on the economy.

You can use the essays in your school/college competitions for writing essays, debates or giving speech.

Cashless India Essay 1 (100 words)

It was on 8 November 2016 that the Government of India took the whole country by storm by announcing that the currency notes of Rs 500 and Rs 1,000 were no longer legal tender. The government move aimed at curtailing the menace of black or counterfeit money which is largely used to fund criminals and terrorists as part of a parallel economy. The acute shortage of money in the wake of this decision led to long queues of people outside ATMs or banks seeking to exchange their notes or withdrawing cash.

But eventually, the move has turned out to be a push towards cashless India that is bound to pave the way for a cashless economy, marked by greater transparency, ease and convenience in monetary transactions.

Cashless India Essay 2 (150 words)

The Union government’s demonetization initiative and the subsequent drive towards developing a cashless India have invited its share of both bricks and bouquets. There have been widespread protests organised by the opposition parties across the country against the cash crunch in the wake of ban on old currency notes of Rs 500 and Rs 1000.

However, the initial difficulties have subsided now and the people are beginning to realize the safe and convenient modes of digital payment. Moreover, to encourage the people to further go for cashless modes, the Narendra Modi Government has provided a slew of incentives and measures.

The latest World Bank report has mentioned that the demonetization will not have any long-term adverse effect on the health of Indian Economy. Rather it will prove beneficial with growth of the Indian economy rising to 7.6% in fiscal year 2018. Liquidity expansion in the banking system post-demonetization has helped the banks to lower lending rates, which in turn is bound to lift economic activity.

Cashless India Essay 3 (200 words)

The Union government headed by Prime Minister Narendra Modi has been moving towards realizing his vision for a cashless India, ever since the demonetization of the old currency notes of Rs 500 and Rs 1000, which was announced by it on November 8, 2016. It was really a bold move considering the fact that in India people are more reliant on cash than in other countries of the world. Suddenly, there was severe shortage of cash in the wake of this decision and people had to encounter great difficulties in buying things they wanted with little cash available in banks and ATMs they would throng in unending queues day and night.

Conclusion: However, the benefits of this move have now started trickling in with more and more people switching to digital modes of receiving and making payment. India is gradually transitioning from a cash-centric to cashless economy. Digital transactions are traceable, therefore easily taxable, leaving no room for the circulation of black money. The whole country is undergoing the process of modernisation in money transactions, with e-payment services gaining unprecedented momentum. A large number of businesses, even street vendors, are now accepting electronic payments, prompting the people to learn to transact the cashless way at a faster pace than ever before.

Cashless India Essay 4 (250 words)

Cashless India is a term coined recently after the Union government went ahead with its plans to demonetize currency notes of Rs 500 and Rs 1000. Initially, it led to severe criticism as people faced great difficulties in exchanging the old currency notes or withdrawing cash from their accounts.

According to the critics of the government, adequate arrangements should have been made in advance to support the people in dealing with cash crunch in the wake of this move towards cashless India. Also, adequate security measures are required to guard online transactions against fraud which is very common in India. They critics further argue that due to unavailability of required cash flow in the market, many people died and lost their jobs, painting a scary picture of India becoming cashless post-demonetization.

However, after the demonetization of the currency notes of Rs 500 and Rs 1,000, the country has witnessed a surge in cashless transactions through the digital mode, be it through credit/debit cards, mobile phone applications, Unified Payments Interface (UPI), BHIM (Bharat Interface for Money) app under Aadhaar Enabled Payment System (AEPS) or e-wallets etc.

Conclusion: True, there are difficulties in implementing the idea of cashless economy in a vast country like India where a large number of people are living under misery and poverty, yet a beginning had to be made someday. Today, there is a sea change in the mindset of people with regard to digital means of monetary dealings which are safe, easy, convenient and transparent. There is no place for black money or counterfeit currency in cashless India.

Cashless India Essay 5 (300 words)

Cashless India is a recently introduced phenomenon targeted to bring a sea change in the country’s economy by the Indian government, transforming the cash-based economy into cashless through digital means.

However, still there are various challenges to be addressed if we want to make India cashless in true sense. India is a vast country and the convenience of making transactions through the online mode is not available across the country. In small cities and villages, the people are mostly suffering due to acute cash crunch situation. To make India cashless in true sense, investment is required to be made in enhancing the facility required on a mass scale for cashless transactions across the country.

Handling the flow of cash with digital technology has a range of advantages. Cashless transactions have made people keep all their cash into the bank and hence liquidity in the banking system has increased. Also, it has stopped the flow of black money, up to some extent. Now the banks and financial institutions have more money to lend to the people to support the growth of Indian economy. The other most important advantage is that this situation will make people pay their taxes in a transparent manner; hence the government will have more money to run various schemes meant for the welfare of the public.

Conclusion: Post-demonetisation, the people have finally started believing in the power of the plastic money in the form of credit card/debit card, and other channels of electronic payment. Online banking has gained prominence due to unavailability of enough cash in the market. Moreover, E-commerce modes of making payments have also become popular, as most of the people have now started making payments of even Rs 50 through the digital modes. All these developments are considered to be good for the healthy growth of the economy.

Cashless India Essay 6 (400)

Introduction

Cashless India is a move that has assumed significance in the backdrop of demonetisation of high value currency by the NDA government at the Centre. On November 8, 2016, Prime Minister Narendra Modi announced demonetisation of currency notes of Rs 500 and Rs 1000 and took the people by surprise. People standing in spiralling queues at ATMs and banks’ counters to exchange their old currency notes or withdraw cash became a familiar scene across the country.

However, the new cashless revolution ignited by this move has gradually started changing the mindset of people, who were earlier mostly dependent of currency notes only for doing transactions.

Benefits of cashless India

• Cashless transaction does away with any hassle to carry cash.
• It is in keeping with the worldwide trend. People need not carry any cash in various countries around the world as most of the transactions there are done electronically.
• In digital transactions, you can view history of your expenses at one go which helps you to manage your budget easily.
• Since cashless transactions are traceable, they invite payment of taxes, wherever applicable, thus ruling out use of black money.
• As tax collections become easy through the cashless mode, it accelerates the pace of economic development, making it easier for the government to spend on education, health care, employment generation, infrastructure and the overall welfare of the people.
• Increased tax collections lead to reduction and simplification of the tax structure.
• Transfer of monetary benefits to the poor and the needy through bank transfer rules out their exploitation by the unscrupulous middle men.
• Cashless transactions deal a body blow to counterfeit currency or distribution of black money through Hawala channels. It also cuts the supply of unaccounted money used in funding of criminal and terrorist activities.
• It saves the government substantial costs in printing and circulation of currency notes.
• Increased liquidity of money with the banks makes them lower their interest rates puts the huge amounts of cash deposited with them to some productive use.

Conclusion: A part of Digital India programme, the concept of cashless economy in India is centred around the vision of transforming the country into a society, which is digitally enabled and empowered by several modes of cashless transactions. Consequently, digital modes like credit/debit cards, mobile wallets, banks pre-paid cards, UPI, AEPS, USSD, Internet banking etc have gained in currency, leading to cashless India in near future.

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Cashless Economy – Is India Ready for Transformation?

From Current Affairs Notes for UPSC » Editorials & In-depths » This topic

To make India a cashless economy, during the Union Budget 2019-20 , the Finance Minister had stated that 2% tax deducted at source will be levied on cash withdrawals that exceed Rs.1 crore in a year from the bank account to discourage the practice of making business payments through cash transactions. The government had also said that the businesses with an annual turnover of over Rs.50 crore can offer low-cost digital modes of payments and no charges or Merchant Discount Rate will be imposed on them or their customers. This is a noteworthy move by the government of India to incentivize people to adapt to the emerging cashless economy. Transforming the cash-dependent India into a cashless economy is proving to a great challenge for the Indian government given the size of the informal sector within the Indian economy. It is estimated that nearly 90% of all transactions in the Indian economy is dependent on cash. This is due to the large informal sector that employs 90% of the workforce. India cannot become cashless unless this mammoth sector adapts to the digital payments. Incentivizing the people alone is not sufficient. The government needs to develop the supporting infrastructures and technologies for India to become a cashless economy while also providing awareness to its people.

This topic of “Cashless Economy – Is India Ready for Transformation?” is important from the perspective of the UPSC IAS Examination , which falls under General Studies Portion.

What is a cashless economy?

• Cashless economy is the term that is used to describe the situation wherein the flow of cash doesn’t exist within the economy and that all the transactions are undertaken through electronic channels.
• This can include cash transfer through credit and debit cards, direct debit, and electronic clearing and payment systems such as Immediate Payment Services (IMPS), National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) in India.

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Why should India transform into a cashless economy?

India should shift to a cashless economy. The reasons for this statement are as follows:

• Cash is expensive: A significant amount of time and money is needed to print the currency. RBI has spent Rs.32.1 billion on printing the currency. The effort is also needed to steer the money through the system and to the consumers. Also, there is the cost for the setting up of and maintaining of the ATMs. Furthermore, the paper currencies have shelf-life after which it needs to be replaced. It is estimated that the direct cost of running a cash-based economy is about 0.25% of India’s GDP.
• Cash is the driver of the shadow economy : Cash is difficult to trace. Its transaction provides secrecy enabling the people to carry out illegal activities like tax evasion, black money , etc. In 2007, currency in circulation was almost on par with the bank deposits. However, in the last three years, the currency with Indians was more than the bank deposits by 50%. According to the government data, the amount of black money (unaccounted money) in India is 15-16 lakh crores. The unaccounted money is used to finance the shadow economy that is running parallel to the government as it finances illegal activities terrorist activities, purchasing votes, smuggling, betting, trafficking, etc.
• Enables financial inclusion and increased tax revenues : A cashless economy mandates all citizens to have bank accounts. This will ensure a higher financial inclusion rate. It will also guarantee transparency in the transaction of money within the economy – minimizing the possibility of tax evasion exponentially. Even the beneficiaries of various government schemes can easily be identified and taken care of by the government.

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What are the measures taken by the Indian government?

• Demonetisation : Demonetisation drive has not curbed the black money. However, it had nudged India towards being a cashless economy. It has become a radical ‘reform’ to transform India into a cashless economy. Paytm had witnessed 5 million daily usage post demonetisation as opposed to their average transaction of three million. It also saw a 700% increase in the overall traffic and a 1000% increase in the amount of money added to its account in the first two days of post-demonetisation. Ola Money too saw a 1500% increase in its e-wallet.
• Apart from demonetisation, the government has undertaken various other measures to reduce people’s dependence on cash in recent years.
• Some of them are as follows:
• Pradhan Mantri Jan Dhan Yojana , one of the biggest financial inclusion initiatives in the world, was launched in 2014. It is a national mission on financial inclusion which has an integrated approach to bring about comprehensive financial inclusion and provide banking services to all households within the country. This scheme ensures access to a range of financial services like availability of basic savings, bank accounts, access to need-based credit, insurance and pension. It has played a significant role in the opening of bank accounts for the poor.
• Direct Benefit Transfer (DBT): It is a scheme that was launched by the Government of India to transfer the benefits and subsidies of various social welfare schemes like LPG subsidy, Old Age Pension, Scholarship, MGREGA, etc. directly to the bank account of the beneficiaries. This allowed for the penetration of digital banking into rural India.
• Unified Payment Interface (UPI): It is a system that powers multiple bank accounts into a single mobile application (of any participating banks), merging several banking features, seamless fund routing, and merchant payments into one hood. This makes digital transactions a simplified process. Transaction via UPI had increased the monthly transaction from nil to 754 million in less than 3 years.
• GST: The implementation of GST has encouraged businesses to opt for cashless transactions.
• Financial Literacy Centres: The RBI and Finance Ministry have established the Financial Literacy Centres (FLCs), a keystone of the PMJDY. This initiative has provided financial education programmes to spread awareness of banking products and benefits.
• The RBI has also provided licences to open new-age small finance banks and payment banks which are expected to give a push to financial inclusion and bring in innovative banking solutions.
• Other promotions like e-banking, debit and credit cards, card-swipe or PoS machines and digital wallets have made the transition to cashless economy easier.

What are the factors that determine the transition to the cashless economy?

Several factors determine the transition to the cashless economy. They are as follows:

• Awareness and skills related to banking and e-transactions
• Technological developments to support the cashless economy
• Government interventions to promote the transition.

Indications in India of transition to the cashless economy are as follows:

• Mobile wallets have significant market traction in India in recent times.
• Banks and related service providers have invested highly to improve security and ease of cash transactions.
• As previously mentioned, the Government of India is undertaking various measures to incentivize the population to shift to the cashless economy while also discouraging the cash payments.
• In India, as per the 2011 census, more households had mobile phones than toilets. 58% of households had mobile phones while 47% had toilets within the houses in 2011. 5 years later, the gap between the two has widened as the march of telecom connectivity has outpaced the march of water connectivity in the country. According to fresh data from a nationally representative household survey, the proportion of households with toilets has increased while the proportion of those with mobile phones has grown even more sharply. This shows the increased potential of the Indian economy to transform into a cashless economy if the government intervenes.
• India’s current economic situation has created a crucial turning point. If this situation is handled correctly, there is a high probability of India becoming a cashless economy.

What are the challenges that India might face while transferring to the cashless economy?

• Lack of adequate infrastructure and technology within the Indian society : India, a country with a vast area, currently has only 2.3 lakhs ATMs and 14 lakhs Point of Sale (POS). This is much too low when compared to other countries like the UK, France, Australia, and Brazil as they have three or four times that of India. Moreover, the ATMs are concentrated in urban areas and they are scarce in suburban and rural areas.
• Limited usage of credit/debit cards : India has a user base of 750 million cards. Ideally, its usage on PoS should be at least 375 million transactions per month, on the assumption that the customers, on average use the card at least once in two months on the POS terminal. But according to the RBI data, the volume of POS and e-commerce transactions together for all banks is about 130 million against the 765 million on the ATM channel as of 2016.
• The penetration of mobile internet is very low in rural India : Making India a cashless economy is highly difficult in the current scenario as rural India has poor internet connectivity. Also, the awareness and knowledge related to digital transactions are limited in rural areas.
• Indian economy is cash-dependent: India is much dependent on cash, so much so, that the MNCs like Amazon had to include “cash on delivery” to penetrate the Indian market. The rate of cash to GDP is the highest in India (12.42%). In other large economies, the average cash to GDP ratio is 5%. In fact, the year 2015 saw 78% of all consumer payments in cash in India. On the other hand, during the same period, it was 20% and 25% in the US and the UK. India is also the 4 th largest user of cash in the world. This shows India is not fast enough to adapt to the current era, the one that is dominated by technological innovations and developments. Rural India’s adaptation to new technologies is slow. This is a major concern for India’s aspiration to become a cashless economy.

What can be the way forward?

• Targeted financial education drive can be undertaken by the government to improve the knowledge of e-transactions to the public, even the illiterate.
• The banks must make sure that the transaction fee is either free or affordable to all.
• The banks must encourage the opening of zero balance accounts to encourage the poor to make use of the bank accounts.
• The government must improve internet connectivity in rural India and other isolated regions .
• Supporting infrastructures must be assured like the availability of ATMs in the rural and suburban areas as the availability of bank accounts alone cannot address the problem of India being overly dependent on cash.

Conclusion:

According to a report by Google India and Boston Consulting Group, by 2020, $500 billion worth of transactions would take place online. This means that the increase will be 10 folds. Furthermore, cash-based transactions would fall by 40% in the coming years. The online transactions have increased 20 times in the last 6 years. This data is before the demonetisation. While observing the recent situation, it is evident that India is well-equipped to adapt to the slow-paced shift towards the cashless economy.

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Indian Economy

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The Big Picture – Cashless Economy

• 11 Jul 2019
• 10 min read
• GS Paper - 3
• GS Paper - 2
• E-Governance

Presenting the Union Budget for 2019-20 , the Finance Minister said that 2% tax deducted at source (TDS) will be levied on cash withdrawals exceeding Rs 1 crore in a year from a bank account to discourage the practice of making business payments in cash.

Also, the government has said that businesses with an annual turnover of over Rs 50 crore can offer low-cost digital modes of payments and no charges on Merchant Discount Rate (MDR) will be imposed on them or their customers.

The Reserve Bank of India and banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payment .

Analysis of the Proposals Made in the Budget

• In the year 2005, the government introduced more or less same proposal i.e. Banking Cash Transaction Tax (BCTT) . The BCTT of 0.1% was introduced for withdrawal of cash on a single day of over Rs 25,000. The 2006 budget showed that only 350 crores had been collected by the banks for paying government on that account. The amount was not considered enough to continue with the implementation of the program.
• This proposal will incentivise merchants to offer the option of digital payments including UPI, credit/debit cards, RTGS, NEFT to their customers.
• It is based on the number of transactions rather than the value of transactions as in the case of TDS proposal.
• A penalty of Rs. 5,000 a if the merchants do not offer digital modes of payments to their customers by a particular date makes it binding to the merchants .
• The boost to digitisation should not result in losses to anyone, expecting the banks and companies having a turnover of over Rs 50 crore to bear the cost of digitization is not fair. It is quite possible that such companies may witness a negative impact on their transactions.
• There is a need to create incentives and disincentives structure by which people automatically get encouraged to move towards more digital transactions.

Cashless Economy

• It is not that any economy can ever be completely cashless, cash will continue to play its role. Even in the developed countries, the prevalence of cash is not completely being eliminated.
• If one reduces the use of cash, the compliance level in various things gets better. For example, better recognition of economic activities, more efficient collection of tax etc.
• The GDP can get positively impacted by 0.5-0.6% due to digitization.
• However, using cash in small amounts has its own set of benefits. It offers security and protects the privacy of an individual. Also, it does not have an associated cyberthreat as in the case of digital transactions.
• Transition to cashless economy also has the burden of financial exclusion due to lack of digital literacy, especially in the case of poor and elderly .

The Government’s Initiatives for Digitizing the Economy

• The proponents of the demonetisation argue that if it had not happened, further quick measures to encourage digital transactions like increase in the number of point of sale machines, introduction of mobile wallets like Paytm and PhonePe had not happened.
• There were 18 trillion rupees approximately in circulation before the demonetisation, at the end of that fiscal it was around 13.5 million and presently, 20-21.5 trillion, less by 4.5 around trillion.
• In the year 2013, the value of digital transactions was around 0.7 trillion, it is now 5 times i.e. 3.5 trillion. This can be the result of the 4.5 trillion rupees being less in circulation now.
• Some see the growth of digital transactions during demonetisation as a bit of compulsion as there was not enough cash in the economy.
• The National Payments Corporation of India (NPCI) created the Unified Payments Interface (UPI) which is a payment platform in which funds can be transferred between the banks effortlessly. It created the digital infrastructure for private players to come and offer apps for payment services to the citizens. PhonePe, Paytms, mobiquicks are examples. The private players also helped in popularising the digitisation in the economy.
• The government and the private sector have also started using Big Data techniques for improving the financial services provided by them. Credit offerings are now being based on the transaction history of the consumers.

Way Forward

• Presently, 10% of the internet users in the world are in India and per month use of data in India is 9GB, that means that people are moving towards digitization.
• Also, India needs to have a consistent broadband network and power connection in order to include the rural consumers . The government has already launched Bharatnet in this direction and background infrastructure for rural area is expanding slowly.
• All the government transactions should be done using digital payments.
• The government should facilitate payment of tolls, purchase of railway tickets, subsidy payments to farmers through a digital medium.
• The government should create cash-in cash-out machines (CICO) instead of ATMS which are now becoming very bulky and difficult to build and maintain. CICO machines can operate with a sim card whereas ATMs require a broadband connection.
• India’s transition to a cashless economy needs more focus on behavioral change (as observed during demonetization). The government is moving in the right direction as supply of digital infrastructure will eventually create demand for digitalization. This can have a multiplier effect on the economy.
• Sweden and China are leading in digitization. In China, a reasonable amount of money is transacted through ‘Wechat’. Whatsapp is trying the same in India but is suffering due to data localisation issues . Such issues needs to be resolved soon.

The switch to digital economy should not be based on compulsions and should be left on the market forces. Incentivizing is better than imposing financial burden on either companies or banks. Also, the policy framing in this regard should be more inclined towards the consumer and less on the digital companies.

India’s demographic dividend offers hope to this transition. Private sector participation and rural inclusion should remain the focus areas while moving forward towards ‘Digital India’.

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Advantages and Disadvantages of Cashless Economy | Pros and Cons of a Cashless Economy Society

March 31, 2023 by Prasanna

Advantages and Disadvantages of Cashless Economy: Since the pastimes, India has always been categorized under the niche of a cash-based economy. The government seized all black money, undeclared commodities, and the recent Covid pandemic compelled contactless mortgages and boosted cashless transactions.

The government initially planned the natural route for the cashless economy in 2006 by implementing demonetization in the Indian subcontinent.

Students can also find more  Advantages and Disadvantages  articles on events, persons, sports, technology, and many more.

Demonetisation pushed people to opt for cashless transactions due to the scarcity of liquid cash available to the public. The government had confiscated the majority of the black money, and many digital payment platforms came into being, which encouraged people to migrate toward cashless transactions.

Formerly, people were unwilling to accept the method of cashless transactions due to the lack of awareness, safety reasons, insufficient availability of the internet and cell phones, particularly in the rural areas.

The internet and mobile phones have arrived in every house because of the technological reconstruction throughout the last five years, making citizens adapt to the cashless transaction system.

The introduction of demonetization has motivated the public to open many bank accounts, which in return would be of help in the volume expansion of cashless transactions. People are presently accepting this process due to the smoothness, clarity, and more active bank transactions.

One can say that India is undoubtedly prepared to shift to a cashless economic system owing to the change in the point of view of people of the country, evaluation of technology, increased internet amenities, and better government initiatives.

What is Cashless Economy? Advantages and Disadvantages of Cashless Economy 2022

If one was to define Cashless Economy, it could be portrayed as a condition in which the flow of cash within an economy does not exist.

Individuals should complete all the transactions via electronic channels like direct debit cards, credit cards, direct debit, electronic clearance, and payment methods such as the IMPS or the Immediate Payment Service, NEFT, or the National Electronic Funds Transfer, and RTGS or Real-Time Gross Settlement in India.

This article aims to explain in great detail the following about Cashless Economy:

Advantages of Cashless Economy

Disadvantages of cashless economy.

• Comparison Table for the Advantages and Disadvantages of Cashless Economy
• FAQS on Pros and Cons of Cashless Economy

• No Forged Currency: Forged currency values will be declared worthless. People who involve in social evil practices generally tend to accumulate their wealth in cash. With the process of a cashless economy coming into effect, this accumulated cash will be useless due to the note ban. If people invest money in the bank, the government will question them about that particular income source.
• Transparent System: Computerized payments will improve transparency and culpability. The progress of the economy with liabilities can solely take place in a cashless economy.
• Limited Cash Fraud:  Theft or fraudulent acts concerning cash will be reduced to the bare minimum. Following the note ban, nobody would dare to steal money, which will promptly hinder the theft since the banks won’t accept that money anywhere.
• Effortless Payment:  The cashless transaction guarantees more manageable payment across the nation. For instance, people who desire to transfer money to areas across India can effortlessly do it via the NEFT procedure. With the initiation of digitization, every individual ought to receive digital literacy at some time, therefore easing their troubles in the transfer of money and make transactions more honest.
• Easy International Pay:  Exchange of currency is a monotonous job for many individuals who usually reach for international travel. Cashless payment is an excellent option for those people.

There is no need to worry about exchange rates. Citizens only need to possess a valid mobile device with their bank account linked to it.

• Low Literacy Rate:  The low literacy rate is one of the top causes for multiple existing issues. Beginning a cashless economy in India or building a digitally literate India is not a simple task. Many places don’t yet have electricity and water. So, computers and the internet are a far cry. A high number of the population is based in most of the rural areas, without these necessities. People in these underprivileged areas rely entirely on cash. They can be deceived if they must rely on someone for online activities.
• Chances of corruption:  Despite being one of the points for digitizing financial transactions, one can’t guarantee crime to degenerate. A person exercising a bribe in money might necessitate it in kind instead of cash in the future, such as a mobile phone or a computer system (which is based solely on speculation).
• Economic Disparity:  If the standard payment technique gets changed into the cashless system completely, the chances are that purchasing smartphones or devices will become necessary. In a country like India, where many citizens endeavor to provide for their daily food and necessities, purchasing a smartphone is most definitely a luxury these poor sections cannot afford. If cashless acquisition becomes the standard rule, then inequality can be seen in society because not everyone can afford it.
• Cyber Crime:  India will have to toughen its cybersecurity because of hacking within banks and private accounts happening globally. Being at its nascent stage in the subject of cybersecurity, a country such as India might be extra vulnerable to very threats.
• Overspending:  There is no doubting the truth that cashless transactions are more straightforward to make simply by a mere click; people can execute payments. This advantage of transactions leads to an overspending tendency, particularly among the modern generation.
• Identification Fraud:  The risk of identity fraud is one of the significant disadvantages of the cashless economy in the Indian subcontinent. The rate of online fraud is growing with each departing day, expanding the perils of hacking. Not every person is perfectly tech-savvy or exceptionally aware of all the usage of technical gadgets. While attempting to make digital transactions, many people might end up dissipating their personal identity in the online forum of creepy lurkers.

Advantages And Disadvantages Of Cashless Economy In Tabular Form

Comparison Table for Advantages and Disadvantages of Cashless Economy

FAQ’s on Pros and Cons of Cashless Economy

Question 1. Is the Cashless Economy safe?

Answer:  Indian citizens are quite concerned about the leaking of personal information due to hackers.  More than 60%  of the country thinks that a cashless transaction is not entirely secure since there is a considerable risk of hacking personal data or data breaches.

Question 2. What does Cashless Economy mean?

Answer:  A cashless economy indicates an economic system where digital transactions such as net/ mobile banking, digital wallets, and paying by debit or credit cards substitute the traditional payment method made through cash.

Question 3. What are the modes of payment in a Cashless economy?

Answer: There are three modes of payment:

• Mobile Wallet
• Plastic Money and
• Net Banking
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Cashless Economy in India: Challenges and Opportunities

Proceedings of 10th International Conference on Digital Strategies for Organizational Success

10 Pages Posted: 3 Jan 2019

Aalia Sheerin

Aligarh Muslim University (AMU)

Date Written: January 5, 2019

The history of cashless economy dates back to the barter system days, but the cashless economy now, is focused on the transfer of digital information using different intermediaries. The banking sector around the globe is experiencing IT revolution. India, too, in a span of 35 years has seen many innovations in technology which are pushing the boundaries of payment processes. The retail electronic payment system has progressed in India providing enough opportunities to move towards a cashless economy. E-banking is a fairly new concept in India. The Digital India Programme, 2015 has a vision to transform the nation into a digitally empowered nation. The RBI has rolled out Vision Statement for three years, to provide guidelines in order to enhance the use of ICT in banking sector. The present study aims to analyse the strengths, weaknesses, progress and challenges of the digital payment system in India from 2013 to 2018.

Keywords: E-banking, Retail electronic payment

Suggested Citation: Suggested Citation

Aalia Sheerin (Contact Author)

Aligarh muslim university (amu) ( email ).

Chelamala Perinthalmanna Aligarh, IN Uttar Pradesh 202002 India

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Home — Essay Samples — Economics — Banking — Cashless India: Overview of the Mission

Cashless India: Overview of The Mission

• Categories: Banking Indian Economy

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Published: Feb 12, 2019

Words: 702 | Pages: 2 | 4 min read

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Cashless India Essay

It is very difficult for people to carry cash in larger amounts. We have been noticing the news of robbery or thefts in the newspapers regarding these cases. The new emerging technology namely cashless India has made transactions easy for the people. We need not carry cash amounts but the same can be given by card payment or via online applications.

Every time while paying bills, sending or receiving money, payments on the shop we can use this technology. This reduces the time and effort of people in India. There are many more things that you need to know about the topic. It has been given in form of a long essay that may be an aid to school, college, and university students.

Short and Long Essay on Cashless India in English

Short and long essays on Cashless India in different word limits are given below for students of classes 1, 2, 3, 4, 5, and 6. The language is kept simple so that every student can understand these essays properly.

10 Lines Essay on Cashless India (100 – 120 Words)

1) The government launched the “Cashless India” scheme to make India a cashless economy.

2) A cashless economy promotes online transactions instead of cash transactions.

3) As part of Digital India launched on 1 July 2015, a cashless India is envisioned.

4) This scheme will also help in controlling corruption.

5) The growing cases of robbery and theft will also be reduced due to this scheme.

6) Cashless transactions are fast and more secure than cash transactions.

7) This scheme aims to carry out all the financial activities digitally without involving physical cash.

8) Cashless transactions can be done through UPI (Unified Payment Interface), online banking, micro ATMs, etc.

9) However, online transactions are prone to cybercrimes.

10) This scheme is a disadvantage for poor and illiterate people.

Essay 1 (250 words) – Advantages and Disadvantages of Cashless India

A cashless economy means curbing cash transactions and carrying out online transactions. The scheme cashless India had been launched by the government of India to make India a cashless economy in the world. Here we will be discussing the advantages and disadvantages of going cashless.

Advantages:

• Fast and convenient transactions – The transactions can be easily done by using smartphones through Paytm, Google pay, UPI, etc. The process is very fast and easy to do.
• No theft risks – When we opt for cashless transactions we will not have to carry cash with us. This will reduce the chances of theft.
• Environment-friendly – Cashless transactions will help in reducing the charges of printing currency notes and coins. It promotes the efficient use of paper and hence an eco-friendly initiative.
• Exciting discounts – We avail of good cashback and offers whenever we do debit/credit card or online transactions.
• Reduce corruption – In cashless transactions; there will be transparency as the transactions can easily be traced. Therefore it will help in reducing the bribery and flow of black money in India.

Disadvantages:

• Risk of online crimes – The risk of online fraud and cheating is a threat in doing online transactions. People fear doing online transactions as many have been the victim of these online frauds. The government needs to impose a high-security check in the system to foster safe digital transactions otherwise the dream of making India a cashless nation can never come into reality.
• Poverty and illiteracy – Many people in India are illiterate and are living in poverty. People in rural areas do not know how to use smartphones. It is difficult to make this mission successful without eliminating these problems.

Essay 2 (600 Words) – Meaning of Cashless India and Digital Payment Methods

Introduction

Cashless India is a vision of the Government of India of a cashless transaction society. Cashless India is envisioned under the Digital India campaign launched on 1st July 2015.

Meaning of Cashless India

Cashless India would be an economic state wherein all financial transactions are done without involving physical banknotes or coins. That is, various activities requiring financial transactions like – transferring money, sales, and purchase, etc are to be carried out digitally, instead of physically.

For example, if you are out for making a purchase of groceries for home, you should be able to do it without a single penny in your pocket. This kind of transaction mandates two essential requirements – firstly you must have a debit card, credit card, or any web application that certifies your bank account and authenticates transactions on your behalf. Secondly, the seller, in this case, the grocery shop owner must be in the possession of a Point of Sale (POS) device to carry out the transaction. At the end of the transaction, your bank account will be debited and the account of the shopkeeper will be credited without an exchange of any physical currency.

Likewise, there could be several examples of cashless India, like transferring money to your family members, friends, or business associates, without even physically depositing the money in their bank accounts.

Digital Payment Methods

The following digital payment methods are used under the Cashless India campaign –

• Banking Cards

Different kinds of banking cards are debit cards, credit cards, travel cards, cash cards, etc. The cards offer discounts and additional facilities, for digital transactions. Also, the transaction is secured by two-way authentications, involving secure PIN and OTP (One Time Password).

• Unstructured Supplementary Service Data (USSD)

This service allows financial transactions to be carried out without an internet connection and through the basic phone. ‘*99#’ could be dialed from the phone to avail services like interbank fund transfer, mini statement, balance inquiry, etc. This service empowers the rural population or the elders, who usually use basic keypad phones and are not comfortable using smartphones.

• Unified Payment Interface (UPI)

Unified Payment Interface is an application that allows managing multiple bank accounts through a single platform. You only have to download the UPI App on your smartphone and provide the account and bank details you want to link. The services offered are many, including a balance inquiry, money transfer, transaction history, etc.

• Mobile Wallet

Mobile Wallet allows you to carry money digitally on your mobile. The mobile wallet application could be linked to credit or debit cards and can be used for online transfer of money. The mobile wallet allows you to carry out financial transactions without requiring physical debit or credit card.

• Point of Sale (POS) Device

A point of sale device is a small cordless device available at merchant establishments to carry out financial transactions. Customers are required to swipe their credit/debit cards and authenticate the transaction by entering a PIN in the device, which then completes the transaction and prints a receipt.

Micro ATM is a small device given to business correspondents or small shop owners to carry out instant transactions on behalf of their customers. The device is connected to several banks across the country and allows instant deposits and withdrawal of money. The business correspondents act as a bank in this case.

Cashless India is the government’s initiative for a cashless society wherein financial transactions, howsoever, small or large are carried out digitally. It is a good initiative that makes transacting easy and convenient, but the government must also ensure the safety of such transactions.

FAQs: Frequently Asked Questions on Cashless India

Ans . Sweden has reduced its cash transaction to 2% and thereby moving towards a cashless nation in the world.

Ans. India invests 1.7% of its GDP in printing the cash.

Ans. It will be helpful in reducing crime and fraud and save money wasted on printing and circulating cash.

Ans . Yes, demonetization fostered online transactions as there was a scarcity of cash thereby giving a pace to cashless India.

Ans . Dhasai, a village in Thane district Murbad taluka in Maharashtra, is known to be the first cashless village in India.

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RSTV: THE BIG PICTURE- CASHLESS ECONOMY

            In a bid to promote cashless transactions, the government on Friday said businesses with annual turnover of over Rs 50 crore can offer low-cost digital modes of payments and no charges or Merchant Discount Rate will be imposed on them or their customers . Presenting the Union Budget for 2019-20, Finance Minister Nirmala Sitharaman also said two per cent tax deducted at source will be levied on cash withdrawals exceeding Rs 1 crore in a year from a bank account to discourage the practice of making business payments in cash. The Finance Minister said the Reserve Bank of India and banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payment. Lately, digital transactions using mobile payment firms are on the rise. For instance, Unified Payments Interface transactions have grown to 754 million in June 2019. IMPS and NETC transactions stood at around 171 million and 26 million, respectively.

The Centre is making a big push for online and card-based transactions in the country to achieve its target of becoming a largely cashless economy

Cashless economy

It can be defined as a situation in which the flow of cash within an economy is non-existent and all transactions have to be through electronic channels such as direct debit, credit and debit cards, electronic clearing, payment systems such as Immediate Payment Service (IMPS), National Electronic Funds Transfer and Real Time Gross Settlement in India.

Benefits of cashless economy:

• Increased efficiency in welfare programmes as money is wired directly into the accounts of recipients.
• Efficiency gains as transaction costs across the economy should also come down.
• Reducing use of cash would also strangulate the grey economy, prevent money laundering and even increase tax compliance, which will ultimately benefit the customers at large.
• Usage of cashless mechanisms would also ensure that loopholes in public systems get plugged, and the intended beneficiaries are able to avail the benefits due to them.

Benefits for individuals:

• No need for queues outside ATMs.
• No cashout during long holidays.
• No waiting for a deposited cheque to be credited.
• No risk of carrying currency notes in the wallet.

Why Shift towards a Cashless Economy?

• India is one of the highest cash to gross domestic product ratios in the world, and lubricating economic activity with paper has costs.
• According to a 2014 study by Tufts University, The Cost Of Cash In India, cash operations cost the Reserve Bank of India (RBI) and commercial banks about Rs21,000 crore annually.
• A shift away from cash will make it more difficult for tax evaders to hide their income, a substantial benefit in a country that is fiscally constrai
• Nandan Nilekani, termed demonetisation as “a defining point in India moving to cashless”

Factors that determine transition to a cashless economy

• A meaningful transition will depend on a number of things such as awareness, technological developments and government intervention.
• Mobile wallets have seen notable traction, and it is possible that a large number of Indians will move straight from cash to mobile wallets.
• The availability and quality of telecom network will play an important role.
• Banks and related service providers will have to constantly invest in technology in order to improve security and ease of transaction.
• The government will have to find ways to incentivize cashless transactions and discourage cash payments.
• Government should revamp the tax administration, as more than taxes, small businesses fear tax inspectors.
• India’s current economic moment constitutes a crucial inflection point; if handled correctly, there is a real chance that the unbanked will adopt digital p
• A sharp increase in the use of mobile phones with internet connectivity will help drive the move to digital payments.
• Till the time the penetration for online payments doesn’t reach local stores, the transition will never be truly effective.
• Financial security over the digital payment channels is imperative for pushing the cashless economy idea

Hurdles in making India a cashless economy

• A large part of the population is still outside the banking net and not in a position to reduce its dependence on cash.
• Even for people with access to banking, the ability to use their debit or credit card is limited.
• It will not be easy for the informal sector to become cashless.
• There is a general preference for cash transactions in India.
• Merchants prefer not to keep records in order to avoid paying taxes and buyers find cash payments more convenient.
• People face difficulties in making electronic payments even in metro cities because of poor network
• Low literacy rates in rural areas along with lack of internet access or even basic utilities in many places

Government and RBI Efforts

• Government on its part is working at various levels to reduce the dependence on cash.
• Opening bank accounts for the unbanked under Pradhan Mantri Jan-Dhan Yojana.
• Adoption of direct benefit transfer.
• The Unified Payments Interface by National Payments Corporation of India makes digital transactions as simple as sending a text message.
• From nothing to 754 million monthly transactions in less than three years, UPI has taken off.
• Implementation of the goods and services tax, for example, should encourage businesses to go cashless.
• The RBI and finance ministry have made Financial Literacy Centres (FLCs) a cornerstone of the PMJDY.
• These centres provide tailored financial education programmes to introduce adults to banking products and setting financial goals.
• Major social-media effort to promote cashless transactions, which include e-banking, debit and credit cards, card-swipe or point-of-sales (PoS) machines and digital wallets.
• RBI has also issued licences to open new-age small finance banks and payments banks which are expected to give a push to financial inclusion and bring innovative banking solutions.

Way Forward

• Targeted financial education programmes can improve financial skills and credit management.
• A nationwide financial literacy campaign accompanied by a medium-term strategy to improve access to, and awareness of, electronic payments.

India is ripe for a transition to digital payments. While a cashless economy is not here, the move towards a less-cash economy has begun. Recent expansion in digital wallet usage and the introduction of specialized payments banks are good moves in this direction. But, a lot needs to be done before cash is eased out of the Indian economy.

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Essay on Cashless India in English for Children and Students

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Cashless India is a mission launched by the Government of India led by Prime Minister Narendra Modi to reduce dependency of Indian economy on cash and to bring hoards of stashed black money lying unused into the banking system. The country embarked upon this transition to a cashless economy when the government took the revolutionary step of demonetization of old currency notes of Rs 500 and Rs 1000 on November 08, 2016. This move was targeted at the fake currency circulating in Indian market and the black money that somehow escaped the radar of tax authorities.

Post demonetization acute shortage of currency in Banks and long queues outside ATMs, gradually turned people towards digital transactions, one of the prime requirements under cashless India. If the government succeeds in providing secure and fast digital payment methods to the consumers and merchant establishments across the nation, then the dream of India becoming a completely cashless economy will materialize.

Long and Short Cashless India Essay in English

• We are here providing a variety of long and short essay on Cashless India to empower the students with ready material available online in different word length – in 100, 150, 200, 250, 300 and 400 words.
• These Cashless India Essay written in a simple language will help the students choose any one as per their requirements.
• After going through these essays you will understand the concept of cashless India and its benefits on the economy.
• You can use the essays in your school/college competitions for writing essays, debates or giving speech.

Cashless India Essay 1 (100 words)

It was on 8 November 2016 that the Government of India took the whole country by storm by announcing that the currency notes of Rs 500 and Rs 1,000 were no longer legal tender. The government move aimed at curtailing the menace of black or counterfeit money which is largely used to fund criminals and terrorists as part of a parallel economy. The acute shortage of money in the wake of this decision led to long queues of people outside ATMs or banks seeking to exchange their notes or withdrawing cash.

But eventually, the move has turned out to be a push towards cashless India that is bound to pave the way for a cashless economy, marked by greater transparency, ease and convenience in monetary transactions.

Cashless India Essay 2 (150 words)

The Union government’s demonetization initiative and the subsequent drive towards developing a cashless India have invited its share of both bricks and bouquets. There have been widespread protests organised by the opposition parties across the country against the cash crunch in the wake of ban on old currency notes of Rs 500 and Rs 1000.

However, the initial difficulties have subsided now and the people are beginning to realize the safe and convenient modes of digital payment. Moreover, to encourage the people to further go for cashless modes, the Narendra Modi Government has provided a slew of incentives and measures.

The latest World Bank report has mentioned that the demonetization will not have any long-term adverse effect on the health of Indian Economy. Rather it will prove beneficial with growth of the Indian economy rising to 7.6% in fiscal year 2018. Liquidity expansion in the banking system post-demonetization has helped the banks to lower lending rates, which in turn is bound to lift economic activity.

Cashless India Essay 3 (200 words)

The Union government headed by PM Narendra Modi has moving towards realizing his vision for cashless India. Ever since demonetization of the old currency notes of Rs 500 and 1000, which was announced by it on November 8, 2016. It was really bold move considering the fact that in India people are more reliant on cash than in other countries of the world. Suddenly, there was severe shortage of cash in the wake of this decision and people had to encounter great difficulties in buying things they wanted with little cash available in banks and ATMs they would throng in unending queues day and night.

Conclusion:

However, the benefits of this move have now started trickling in with more and more people switching to digital modes of receiving and making payment. India is gradually transitioning from a cash-centric to cashless economy. Digital transactions are traceable, therefore easily taxable, leaving no room for the circulation of black money. The whole country is undergoing the process of modernisation in money transactions, with e-payment services gaining unprecedented momentum. A large number of businesses, even street vendors, are now accepting electronic payments, prompting the people to learn to transact the cashless way at a faster pace than ever before.

Cashless India Essay 4 (250 words)

Cashless India a term coined recently after the Union government went ahead with its plans to demonetize currency notes of Rs 500 and Rs 1000. Initially, it led to severe criticism as people faced great difficulties in exchanging the old currency notes or withdrawing cash from their accounts.

According to the critics of the government, adequate arrangements should have made in advance to support the people in dealing with cash crunch in the wake of this move towards cashless India. Also, adequate security measures required to guard online transactions against fraud which is very common in India. They critics further argue that due to unavailability of required cash flow in the market, many people died and lost their jobs, painting a scary picture of India becoming cashless post-demonetization.

After demonetization of currency notes of Rs 500 and 1,000, country has witnessed surge in cashless transactions through digital mode. Through credit/debit cards, mobile phone applications, UPI, BHIM app under (AEPS) etc.

True, there are difficulties in implementing idea of cashless economy in a vast country. Like India where large number of people living under misery and poverty, yet beginning had to made someday. Today, there is sea change in mindset of people with regard to digital means of monetary dealings which are safe, easy, convenient and transparent. There is no place for black money or counterfeit currency in cashless India.

Cashless India Essay 5 (300 words)

Cashless India recently introduced phenomenon targeted to bring a sea change in country’s economy by Indian government.

However, still various challenges to addressed if we want to make India cashless in true sense. India is vast country and convenience of making transactions through the online mode is not available across country. In small cities and villages, the people are mostly suffering due to acute cash crunch situation. To make India cashless in true sense, investment required to made in enhancing the facility required on a mass scale for cashless transactions across country.

Handling the flow of cash with digital technology has a range of advantages. It have made people keep all their cash into the bank and hence liquidity in banking system has increased. Also, it has stopped the flow of black money, up to some extent. Now banks and financial institutions have more money to lend to the people to support growth of Indian economy. The other most important advantage is that this situation will make people pay their taxes in a transparent manner; hence the government will have more money to run various schemes meant for the welfare of the public.

Post-demonetisation, people have finally started believing in power of plastic money in form of credit card card, and other channels of electronic payment. Online banking has gained prominence due to unavailability of enough cash in the market. Moreover, E-commerce modes of making payments have also become popular. As most of people have now started making payments of even Rs 50 through the digital modes. All these developments considered to be good for the healthy growth of the economy.

Cashless India Essay 6 (400)

Introduction

Cashless India is move assumed significance in backdrop of demonetisation of high value currency by NDA government at Centre. On November 8 2016, PM Narendra Modi announced demonetisation of currency notes of Rs 500 and 1000 and took people by surprise. People standing in spiralling queues at ATMs and bank’s counters to exchange their old currency notes .

However, the new cashless revolution ignited by this move has gradually started changing the mindset of people, who were earlier mostly dependent of currency notes only for doing transactions.

Benefits of cashless India

• Cashless transaction does away with any hassle to carry cash.
• It is in keeping with the worldwide trend. People need not carry any cash in various countries around the world as most of the transactions done electronically.
• Since cashless transactions are traceable, they invite payment of taxes, wherever applicable, thus ruling out use of black money.
• Tax collections become easy through cashless mode, it accelerates pace of economic development. Basically it is making easier for government to spend on education, health care, employment generation.
• Increased tax collections lead to reduction and simplification of the tax structure.
• Transfer of monetary benefits to poor and needy through bank transfer rules out their exploitation by unscrupulous middle men.
• Cashless transactions deal a body blow to counterfeit currency or distribution of black money through Hawala channels. It also cuts the supply of unaccounted money used in funding of criminal and terrorist activities.
• It saves the government substantial costs in printing and circulation of currency notes.
• Increased liquidity of money with banks makes them lower their interest rates. However it puts the huge amounts of cash deposited with them to some productive use.

Part of Digital India programme concept of cashless economy in India centred around vision of transforming country into a society. However, which digitally enabled and empowered by several modes of cashless transactions. Digital modes like cards, mobile wallets, UPI, AEPS, USSD, etc gained in currency leading to cashless India in near future.

Related Information:

Paragraph on Digital India

Essay on Digital India

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