Is Cashless Economy Boon or Bane?

Money is probably the most significant invention in every aspect of life. Back in the days, the barter system got popular; its drawbacks gave rise to actual currency to practise everyday activities. However, nowadays, all developed and developing societies of the world, including India, are moving towards a cashless economy. In simple terms, in a cashless economy,  everyday transactions are carried out through digital money using digital gadgets rather than the traditional form of money issued by the Reserve bank of India. It includes physical coins or banknotes. 

In the recent past, currency was successfully replaced by the electronic form of money. The transactions were made digitally through credit cards, debit cards, internet banking, mobile banking, digital wallets such as Paytm, Phonepe etc. and card swipes at point of sales, also known as POS machines. We will be reading about the boon or bane of the cashless economy. So, without any further ado, let’s get started! 

Demonetisation in India 

Prime Minister Narendra Modi announced demonetisation on November 6, 2018. Before this announcement, the cash to GDP ratio in India ranged from 12-13% of the GDP. However, it fell to nearly 7.3% at the time of demonetisation. 

The Reserve Bank of India started circulating newly announced 500 and 2000 rupee notes. According to experts, it was the end of the cash-based economy and the establishment of a cashless economy in India. As a result, India started to transform from a cash-based economy to a completely cashless economy. Today, people are less dependent on paper currency.

Advantages of Cashless Economy 

The following are the Advantages of a cashless economy in India –

• Online payments will work in favour of entrepreneurs. It will help them elevate their customer base by crossing all geographical boundaries. 
• There is no need to be physically present to make payments. It can be done with a single click. There is no time lamination as it can be done anytime from any part of the world. 
• Carrying huge piles of cash is always a security concern. In case your credit card or debit card gets robbed, the card can be blocked immediately.
• A cashless economy minimises the chances of highway robbery or pickpocketing. 
• The rise in the share of cashless will contribute to the government revenue since online transactions give rise to multiple events that can be traced for finding tax evasion if any. 
• Cashless transactions help to curb the clack money as these are more visible. 
• If the wages or subsidies of the people around the country are paid online, it minimises the chances of leaks and fills unnecessary gaps. It will also ensure that the subsidy is reaching the right person. 
• People gravitate more toward cashless transactions, promoting the tax base. It will be easier for the public to explain their past expenditures to the tax authorities anytime in the future. 
• Being cashless brings stability and promotes discipline when it comes to your budget. 
• It will be easier to ward off the borrowers if you’re cashless. 
• In the case of a cashless transaction, one can pay even a fraction of rupees or the exact amount required. 
• In online transactions, the counterfeit currency issue will be minimised. 
• Through cashless transactions, the funding of terror activities can be traced easily. 
• Printing currency notes includes a high cost. Hence, switching to a cashless economy in India will minimise this cost. 

Disadvantages of Cashless Economy 

The following are the Disadvantages of the cashless economy in India –

• The biggest and the most prominent fear is the risk while becoming a cashless economy in India is an identity threat. In the case of a cashless economy, there are always chances of a phishing trap.
• If your card is lost or stolen, getting another card is a long, time-consuming process. 
• Since mobile phones are an important digital asset in the cashless economy, it has all the details saved. What if your mobile gets stolen? One can retrieve all your financial details. 
• India is still a developing country with a high ratio of military and non-tech-savvy population. Hence, the real implementation of a cashless economy in India may not be the ideal decision. 

Conclusion 

With this, we come to the end of the topic Is Cashless Economy Boon or Bane. Demonetisation truly left everyone in a state of shock; however, it was proven good for the economy. It gave rise to a new term called the “Cashless Economy”. 

Although the cashless economy has a bunch of advantages, it does have its cons too. One of the biggest cashless economy benefits is the overall development of the nation; however, presently, we are not in an ideal position to go completely cashless as India is still a developing country with a high ratio of military and non-tech-savvy population. Hence, the real implementation of a Cashless Economy may not be the ideal decision.