India is one of the fastest growing economies in the world, and it’s increasingly becoming a part of the digital revolution. However, the government is also trying to promote a cashless economy and so have introduced various initiatives to promote this. Cashless transactions have a number of advantages like reducing the cost of transactions, saving the government the cost of printing currency notes, and reducing the use of paper notes resulting in reduction in the energy cost. But cashless transactions don’t have many advantages. It results in a lot of problems like slowing down the economy and increase in tax evasion.
Bitcoin is a popular means of payment in many countries. It is unregulated, decentralized, and the transactions are made in real time without the involvement of traditional financial institutions. Though comparatively newer, bitcoin is already the most widely used currency in the world. Bitcoin transactions have become common in international commerce. It is also gaining ground in India, though the government is yet to make any official announcement in this regard.
The cashless economy has been growing at a steady pace in India for years, and is now one of the fastest growing economies worldwide. The government of India has made it mandatory for all businesses to accept electronic payment by the middle of next year. In a country where people prefer cash to plastic, many are worried that such a move will hurt the economy.
Cashless economy in India: Importance, advantages and disadvantages
The importance of a cashless economy in India
In an effort to curb the circulation of counterfeit notes, respected Indian Prime Minister Narendra Modi made a surprise announcement early in the second week of November 2016 to withdraw Rs 500 and Rs 1000 notes from circulation in India with immediate effect. A few days after introducing such a policy, Mr Narendra Modi introduced a new plan to make India a cashless economy. The main objective of such a measure is to reduce black money and circulation of counterfeit notes in the Indian economy. A cashless economy is one in which cash is not used. All transactions are done with plastic cards or electronically. A cashless transaction is an electronic transaction of money via an online bank, credit card, debit card, e-wallet, etc. Using a computer, smartphone or tablet, a person can make purchases, pay bills and manage their finances anywhere, anytime.
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Benefits of a cashless economy (uses and benefits)
1) It reduces the circulation of cash. This significantly reduces the cost of printing banknotes and minting coins.
2) a cashless economy leads to money laundering. So black money or a parallel economy can’t last long.
3) Electronic gadgets are easier to handle and carry than cash. A person has a certain amount of ability to carry cash, while a smartphone or tablet is not difficult to use for transactions of any amount.
4) Theft and burglary are reduced to virtually zero because it is absolutely impossible to commit them when electronic money is used in the economy.
5) Illegal commercial activities in the society, such as drug trafficking, human trafficking, money laundering, prostitution, etc., cannot continue for long.
6) Bank notes and bills are not hygienic because they carry germs. This does not apply to electronic gadgets.
7) A cashless economy helps increase the tax base because most transactions in the economy can now be controlled by the government.
8) The cashless economy promotes digitalization. This leads to the adoption of electronic gadgets by the people of the country. It makes people technologically savvy.
Challenges of cashless economy in India (drawbacks and shortcomings)
1) Hacking and cyber fraud can affect the overall functioning of the economy. To prevent such illegal activities in the interests of society and the state, a reliable data security system for Internet processing is necessary.
2) Fees, surcharges, charges relate to transactions carried out electronically. This thing should be freed up to make transactions more favourable to individuals.
3) Pensioners have difficulties in making transactions electronically because they generally do not have the technical skills of younger people.
4) Most poor people don’t have their own bank accounts. This makes it virtually impossible for them to conduct cashless transactions.
5) If the economy goes cashless, the banks will undoubtedly struggle. The administrative activities of banks will become very complex and extensive.
The Indian government is planning to make India a cashless economy soon to solve the problems of black money, counterfeit notes, tax evasion, etc. No country in the world has achieved the goal of a completely cashless service. India, as a developing country, has to solve many problems to achieve the title of a cashless economy.The cashless economy in India is a newsworthy trend, especially in the light of the Reserve Bank of India’s announcement of a draft policy which proposes a universal nationally-integrated payments system (UNI-PDS) mechanism for the country. At the moment, only a few states in the country have a cashless economy and the Central government is working to cement the concept in the remaining states.. Read more about analyse the importance of cashless economy and let us know what you think.
Frequently Asked Questions
What are the advantages of cashless economy?
The activities of the most basic and humble of human beings—the ones who have no alternative but to spend their lives on farming the fields, fetching water from the wells, or ploughing them with the oxen—are increasingly being held hostage by the cashless economy. Farmers, agricultural labourers, housemaids, milkmen, shop owners, coolies, barbers, street vendors, and hundreds of other are all losing out on their livelihoods because of the menace of cash. It is often said that India will be cashless by 2025. The reason behind this says that by 2020, the number of transactions done through cards will overtake the number of those done through cash. This will be due to the increasing use of smart cards and debit cards which will be used as a medium of exchange.
What are the advantages of cashless India?
Major Indian banks have already been adopting a cashless payment system in an effort to cut costs and improve efficiency. This system, called Aadhaar Pay, allows customers to make payments through their bank account and mobile phone, eliminating the need to carry large amounts of cash. The Indian government wants to make India a cashless economy, but what does this mean? Is this good or bad for the people? What will the Indian people gain and what will they lose? These questions are at the heart of the issue.
What are the advantages and disadvantages of cashless economy?
Cashless economy has frequently been promoted as an attractive alternative to the use of paper money and coins in the United States and other countries. Its advantages are more obvious: it cuts down on clutter at the checkout, eliminates the need for counting money, and can save money on fuel costs. Its disadvantages are less obvious but are significant and may be more troublesome. India is one of the top emerging markets that is rapidly changing its way of doing things. The Digital India program is already visible in the Indian lives with a lot of digital payments being made through debit cards, smartphones etc. However, a cashless economy may not be all that beneficial and beneficial.
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