The government took on the daunting and challenging task of making the most cash dependent country go digital & cashless in a relatively short span of time. Over and above several other initiatives, the launch of the BHIM app encouraged urban and rural people to use digital forms of payment and simplified the process in the bargain.
More than making the country go cashless; the government was trying to create a mind-shift and a behavioral shift of how people do fiscal transactions. A lot of positives and negatives have been discussed and debated on this bold drive and the responses are mixed and the success or failure of this initiative is multi-layered.
A positive result of the entire initiative points to a sharp increase in digital transactions. Non-cash payments saw a surge immediately following the demonetization policy enacted in November 2016, when cash in circulation fell by two-thirds. Digital transaction volumes grew 43 percent between November and December 2016, driving hopes that the shock would kick-start India’s transition to a cashless economy. Still, with roughly 98 percent of consumer transactions reliant on cash prior to demonetization, it was inevitable that most Indians would return to cash once new bills were in wide circulation. Growth in digital payments did indeed slow in the first two months of 2017, but the latest reports indicate that the shift from cash is still underway, with an overall increase in digital transactions of 33 percent by volume and 59 percent by value since November 2016.
The need to make easy, quick and secure payments has grown, which was seen with the transactions made with payment tools such as NEFT, prepaid payment instruments, debit and credit cards POS machines, digital wallets and mobile banking. The demonetization initiative has certainly encouraged more people to grasp digital transactions and adopt these technologies in their everyday life. Various industries like financial technology have boomed as a result of this behavioral shift.
At Evolute, we’ve held the vision for a cashless and digital economy since the last few years. Much before demonetization, we’ve recognized the need to create innovative products and solutions that would drive financial inclusion and non-cash transactions for the masses. Our products are omni-industry, i.e. applicable to diverse businesses, E-Governance, Public Distribution Systems, Micro Banking, Mobile Point of Sale, Micro Finance, Retail, Everyday payments and much more. We believe a cashless economy that is financially inclusive is the only way to develop and create a better future for generations to come.
We also believe that in the long run, the roll out of all the initiatives by the government will move India beyond cash. India today has the opportunity to develop a broad national network for digital payments that are cheap, convenient, and accessible to everyone, rich and poor, urban and rural. Whether you condemn it or condone it, the demonetization initiative has created a huge shift in the market, and the stage is now set for bigger things that the country is capable of.