Is India Ready For Cashless Economy?

Let us discuss Is India Ready For Cashless Economy? A cashless society is inevitable. Developed countries have almost achieved the status and ready to adopt the future technology. But, India still needs to wipe the floor with strategic ramifications in the system itself. Let’s discuss all the aspects of ‘Is India ready for the cashless transformation?’ We will also provide Is India Ready to go Cashless ppt and Is India ready for cashless economy Essay pdf in 500 words.

What is a Cashless Economy?

A cashless economy is an economic status, where the transfer of money is done on digital platforms. After a series of multilateral economical transformations, India is now heading towards a cashless economy. For this initiative, the Reserve Bank India (RBI) and Indian Banks’ Association (IBA) founded the National Payments Corporation of India (NPCI) as a first step in 2008. NPCI is an umbrella organization that launched the first-ever 24-hour×7-days interbank electronic fund transfer service through mobile phones, first in India. Later, a Neeraj Kumar Gupta committee was also constituted in 2016 to minimize the use of paper cash and boost cashless digital transactions in the Indian economy. The Government of India has also launched the Digital India program to promote online platforms, cashless transactions popular.

Recent Developments in the Indian Economy

In 2013, the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA) and Pension Fund Regulatory & Development Authority (PFRDA) have promoted National Strategy for Financial Education (NSFE) to create financial awareness and skills. As a step forward, the Government of India has launched the Digital India program on 1 July 2015. The government unveiled two schemes: Lucky Grahak Yojana and Digi Dhan Vyapaar Yojana to implement cashless transactions in 2016 by promoting gifts. In addition, mobile banking, Rupay cards, UPI, USSD were also launched. But, only 5% of transactions were made cashless. So, RBI and the government has brought the “Payments and Settlement Systems in India: Vision 2018” in India in June 2016 aimed at making India cashless. The government has also implemented an economic environment by demonetizing the currency notes of Rs 500 and Rs 1000 from 8th November 2016. The Union Budget of 2020 was focused on boosting the Indian economy through short-term, medium-term and long-term measures. The transaction value through UPI has reached Rs 2 lakh crore at the end of 2019 since its implementation. According to the National Statistical Office’s Second Advance Estimates (SAE) for 2020-21, India’s real gross domestic product (GDP) at current prices stood at Rs. 195.86 lakh crore in the financial year 2020-2021.

Impact of COVID-19 on Indian Economy and Digital Transformation

The Covid Pandemic has hit the Indian economy very hard. But at the same time, it also paved the way for a potential digital economy. The silver linings of the harshest pandemic are that the Indian economy is expected to get a V-shaped recovery from its downturn with a stable macroeconomic situation during the Covid-19 pandemic in 2020. The global data has also shown that the number of cashless transactions was the highest in the last decade. In 2020 India encountered a boom in a digital transaction. This scenario showcases the initial success of the cashless transformation. 

Now, the economic survey 2020 by the Union Government of India has also shown the impacts of a cashless economy:

  • It has shown 11.0% growth in a 7.7% contraction in the Indian Economy.
  • India’s real GDP is forecasted to an 11% growth in the FY 2021-22.
  • India’s nominal GDP is expected to grow by 15.4%.
  • The forex reserve of India estimates US$ 586.1 billion.

India’s position in the Global Economy

Many global surveys and reports on economic development throughout the world have emerged India as a growing economy with a very fast pace in the last decade and forecasted an indispensable improvement in the overall economy of India.

  • India has emerged as the world’s fastest-growing economy in 2022 by the United Nations Department of Economic and Social Affairs (DESA) though India has the characteristics of a middle-income developing economy.
  • India is growing as the 3rd largest country in the world GDP by 2031, as per a Bank of America Securities report.
  • According to the Hurun Global Unicorn list 2020, India has the fourth-largest unicorn base in the world.
  • The Progress, Harmony and Development Chamber of Commerce and Industry (PHDCCI) stated on the International Economic Resilience Rank that India will emerge as the second most resilient economy in 2021.
  • As per the UNCTAD’s Technology and Innovation Report 2021, India topped among developing countries in Frontier Tech.
  • UNCTAD’s Trade and Development Report 2020 forecasted India’s economy, which was contracted by 6.9% in 2020, to grow by 5% in 2021.
  • Crisil has reported that the Indian Economy will grow to 11% in the financial year 2022.
  • OECD interim economic outlook forecasts the growth of India’s GDP at 12.6% in the financial year 2022.
  • India’s Forex Reserves emerged as the 4th largest reserve in the world in 2021. It has surpassed Russia.
  • Fitch’s Global Economic Outlook (GEO) projected India’s GDP growth by 12.8% for the fiscal year 2021-22.
  • S&P Global Ratings has estimated the Indian economy to grow at 11% for the FY 2021-22.

Digital Payment Methods

There are mainly three modes of Cashless Transaction:

  1. Point of Sale (PoS): The point of sale (POS) or point of purchase (POP) is an outlet, where payments are made through payment terminals, touch screens or NFC.
  2. Mobile Apps: There are many mobile applications or apps used for cashless payments. Mobile apps provided by a bank, AEPS are cashless transaction mediums.
  3. QR codes: There are various mobile wallets or e-wallets launched by the government and many private companies. These apps scan a QR code for payment

Cashless Economy: Indian Infrastructure

National Financial Switch (NFS) ATM network: It is the largest network of interconnected ATMs in the country to facilitate convenience banking.

Immediate Payment Service (IMPS): It is a safe way of instant fund transfer within banks across India. Immediate Payment Service or IMPS is a real-time online fund transfer facility through mobile banking, net banking, SMS and ATMs.

Aadhaar-enabled Payment Service (AePS): It is an Aadhar-based fund transfer system based on Point of Sale (PoS) mode of payment.

Cheque Truncation System (CTS): It is an electronic cheque clearing system based on Magnetic Ink Character Reader (MICR) data.

National Automated Clearing House (NACH): It is a centralised clearing service for interbank high volume digital transactions.

Aadhaar Payment Bridge (APB) System: It is an Aadhaar number-based electronic fund transfer system for channelizing Government benefits and subsidies to an Aadhaar Enabled Bank Account (AEBA). AEPS is useful for those users who do not have plastic cards or mobile phones.

USSD-based mobile banking service: USSD (Unstructured Supplementary Service Data) cashless method is performed in basic cellular phones by dialling *99#.

Bharat BillPay: It is a digital platform that has united banks, e-commerce portals, and online payment platforms for bill payment accessible anytime anywhere.

National Electronic Toll Collection (NETC): It is a digital payment method for highway tolls. Recently, FASTags have been implemented for a QRcode-based payment mode.

Bharat Interface for Money (BHIM): It is known as the Bharat Interface for Money-Unified Payments Interface (BHIM-UPI). It is an electronic payment method based on UPI.

BharatQR: It is a secured payment method to facilitate merchant-to-person (M2P) transactions through a QR code.

Security of Cashless Economy in India

Cyber attacks need a huge concern in India. Smartphones are almost as exposed as the desktop for security purposes. These devices are not secured enough though we are using security tools like antivirus, anti-phishing, antimalware, etc. Most of the attacks are phishing, Distributed Denial of Service (DDoS), exploits of vulnerability and spam that have been witnessed over the last six months. Besides, there are attacks like malware, cyber espionage, identity theft, merchant fraud etc. The government has taken many security measures to curb these attacks.

  1. The government has launched ‘Cyber Swachhta Kendra’ (CSK), the Botnet Cleaning and Malware Analysis Centre for desktop and mobile device security. Indian Computer Emergency Response Team (CERT-IN) operates the CSK.
  2. USB Pratirodh’ has been launched as a solution to desktop security.
  3. For mobile device security, an android-based application ‘M-Kavach’ has been launched.

To make secure digital transactions, these measures should be maintained:

  • Stable mobile networks
  • A strong cashless ecosystem
  • Speedy transaction mechanism
  • No additional charges or taxes for making a cashless transaction
  • Adequate regulations for making online payments
  • Availability of more point-of-sale systems
  • Awareness of redressal mechanisms
  • Awareness across masses


  • According to a report published by Finance Ministry the UPI platform has managed about 93,000 transactions in between August 2016 to August 2018, i.e the transaction volume increased to 31.2 crore transactions in just two years.
  • There is only 41% of internet penetration in India according to PMGDISHA (a govt program to support digital literacy)
  • The National Bureau of Economic Research published a survey report, 57% of the total population of India still prefer cash transactions.
  • 100% Day-on-day growth is witnessed in customer enrolment with leading mobile wallets after demonetization.
  • There is a 30% increment in-app usage and a 50% increase in the download of wallets backed by leading banks.
  • The TRAI report says that 82 out of 100 citizens in India owned a mobile phone. (As of 30 September 2016) The cheap call and data rates, along with the lower prices of smartphones, are working as a catalyst towards the shift to a cashless economy.
  • According to a report by Capgemini, 86%  of Indians aged 66 years and above, would adopt digital transactions in the next six months versus a global average of only 35 per cent.

Cashless Economy and Black Money

A Cashless Economy could therefore be an excellent tool to combat illegal money laundering and fake notes, which eventually fasten the rise of black money in an economy.

Fake Notes Detected by RBI
Fake Notes Detected by RBI

Fake notes always generate a parallel economy that rises in inflation. Fake notes or counterfeit currency could be used for anti-national activities. With the widespread digital transaction, the usage and manufacturing of fake notes will be compromised. 

Home Affairs has formed an intelligence body to track the source and origin of Fake Indian Currency Notes (FICN). National Investigation Agency (NIA) also puts its effort to investigate the crimes related to Fake currency.

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Challenges of Cashless Economy in India

  1. Requirement of Cash: Implementation of a cashless economy in a country like India, where the population is about 1.39 billion, is not in a position to prevent the dependency on cash.
  2. Technological failures: The availability of quality network plays an important role. Most of the people are mobile-internet users. Poor network connection or server overloading may fail a transaction during processing.
  3. Cyber Crime: Money is the main instrument of an economy whether it is cashless or dependant on cash. An increasing rate of cyber frauds like hacking, fake mobile applications, fake messages has made cashless transactions less secure.
  4. Illiteracy: Illiterate poor people who have no functional bank accounts or the knowledge of using cashless transaction, meet the cashless economy as a mound of struggles. If the cashless transaction becomes mandatory, it can generate economical inequality due to the clash between the cash and the cashless economy.
  5. Lack of Cybersecurity Awareness: The government has launched the 24X7 DigiShala channel for awareness of the cashless economy and various cashless transaction methods. Most of the citizen in India are unaware of it.
  6. Less Responsive: Many people are aware of cashless transaction but they leave a lesser response due to security concerns and lack of awareness.

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Ways Forward

  • Digital illiteracy could be curbed by allowing NGOs in rural areas. People from unorganised sectors are already financially included through Jan Dhan Yojana but the section is still far away from the basic digital knowledge to perform basic banking operations. This can reduce the digital divide between the rural and the urban areas significantly. 
  • Satellite Internet Service (STS) would be instrumental in the remote areas where is no adequate network penetration, internet connectivity, etc.  The expanded reach of the internet is mandatory for digital inclusion.
  • Banking Correspondence is the fundamental organ of the banking services in rural areas. The government should focus on bringing more models like Banking Correspondence. The young generation should be given recruitment in the Banking Correspondence field with a standard salary as they are underpaid in the current scenario.
  • Cash dispensation through ATMs can be limited to a maximum of  5,000 Rs.
  • All government and corporate transactions should only be in digital or cashless form.

Conclusion: Is India Ready for Cashless Economy?

Countries like Sweden, Finland, Canada are ready to dive into a completely cashless economy in near future. But, India, being a country of around 1.39 billion population (Out of which 60% are rural population) needs time to go completely cashless. Although the initiatives taken by the government of India and the global data indicate the readiness towards the cashless economy. The Ministry of Electronics and Information Technology (MeitY) has launched “DigiShala”, a 24-hoursX7-days knowledge sharing channel to spread the awareness of ‘Digital Payments’. The RBI has recently released the National Strategy for Financial Education (NSFE) document for 2020-2025 to aware people financially and to empower India.

It is an inexorable fact that the future is cashless, and we have to adopt the change. But the government of India should carefully take steps in the pursuit of a cashless society without forcing rapid transition. The government should focus on innovation and security along with digital literacy first. Or else the rural population will be exposed with the culmination of the economic pace. 

Is India Ready For Cashless Economy ppt

Is India Ready For Cashless Economy pdf 

Is India ready to go cashless is an important essay topic. Here we are providing an essay on Is India Ready For Cashless Economy Essay in 500 words for Competitive examinations like UPSC, SSC, State PSCs
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