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What steps/Initiatives did PM Modi take to encourage cashless society in India?


  1. For months before demonetization, government has been announcing new schemes, technology and policy moves on cashless methods.
  2. Government’s world record in number of new bank accounts opened have enabled 99% of households to have a bank account and over 93% of adults have Aadhar cards.
  3. A variety of new payment methods have come up now – RuPay, UPI, BBPS and AePS.

In May 2016, when the demonetization plan was put on motion [public still didn’t know until Nov 8] Modi made an address to the nation asking the people to go cashless: Narendra Modi calls for making India a cashless society in ‘Mann Ki Baat’. Looking back, it was pretty clear on what problem government was addressing with demonetization.

In 2015 the government entered the guinness world records for the number of new bank accounts opened – Jan Dhan Yojna makes it to Guinness World Records, 11.5 cr Jan Dhan accounts opened – 25 crore people have bank accounts through this and majority of these are active. Pradhan Mantri Jan-Dhan Yojana – Now, almost every household in India has a bank account: 99% Indian households are covered by a bank account – If you are worried how your vegetable vendor or sweeper transact now, they likely have bank accounts.

Since I have been following the government policies for long, in the minutes post demonetization, the first thing that came to my mind regarding demonetization was a cashless society. It was a no surprise at all.

What do you think of the decision by the Indian Government to demonetize 500 and 1000 rupee notes?

Cashless society. All of the above things are temporary things. But, I believe the long lasting one could be in moving cashless. The pain of transferring cash could incentivize many to think about going bits and plastic. Today could be a day to introspect for the legal users of the currency. That could have a more significant impact on counterfeiting and unaccounted money.

What plans did the government take?

In the election Manifesto 2014 the plan to push e-banking was mentioned and the goal was a push on financial inclusion.

  1. Two months before the demonetization, government brought the ambitious Unified Payments Interface [UPI] into implementation. UPI goes live with 21 banks in India to enable cashless transactions using your smartphone and Payments revolution: After Aadhaar, NPCI showcases India’s tech talent.
  2. In August 2016, came the Bharat Bill Payment System [BBPS] – NPCI launches Bharat Bill Payment System pilot project – that is to enable people to pay a variety of bills to government and private utilities through a common interface.
  3. In April 2016, came the FASTag to pay tolls electronically. E-toll starts from Monday! Now, make cashless payments at 275 toll plazas
  4. In Feb 2016, government approved a wide range of measures to reduce transaction costs in credit/debit card usage: Press Information Bureau and Cashless economy: Cabinet clears service charge waiver on card payments
  5. In Jan 2016 – Aadhar enabled payment system – NPCI, CSC eGOv launch Aadhaar enabled payment system – early this year to address the lack of enough POS and Smartphones for a cashless society. Startups like PayTM quickly incorporated this system: Paytm to use Aadhaar-based client-authentication system for its payment bank
  6. With a slew of new enforcements and laws the government hit hard on gold purchases and there is a massive drop in India’s gold imports: Gold purchase reduces in India this year
  7. What about real estate? That was touched too. There was a major bill this year Real Estate Bill to bring transparency, accountability in sector and that has led to Modi govt’s push helps India move up in real estate transparency ranking
  8. In the middle of 2015 came the Rupay credit cards: NPCI launches new RuPay credit cards co-branded with Mudra Bank
  9. The government’s heavy push on Aadhar cards has resulted in 108 crore+ Indians having Aadhar card. UIDAI – Official Website
  10. One of the fundamental platforms that the government has been pushing hard since taking power was the JAM trinity – Jan Dhan, Aadhar and Mobile – a way to move payment between the government and people and between people to people. All you wanted to know about: JAM Trinity
  11. To enable widespread use of card payments, we need low transaction costs in contrast to the high charges done by Visa and Mastercard. There comes the RuPay. It was launched in the twiliight zone of UPA government and has been pushed so hard that nearly half of India’s debit cards are Rupay.: RuPay gains market share but still has a long way to go: report

Are all these connected to “black money”? Yes. To eliminate black money you need to account all transactions [black money just means unaccounted money] and that is why you need cashless economy – because cash is the fundamental way to escape accounting. Is black money also in real estate and gold? Yes, and they are attacked too: Modi govt’s push helps India move up in real estate transparency ranking and Gold purchase reduces in India this year

If you are really surprised by the Modi’s “jumla” towards cashless society then you are not reading the news and paying attention. Throughout 2016, the government has been talking of cashless society and easy payments. Just follow the links above.