I don’t really believe India can be cashless: Arundhati Bhattacharya


New Delhi, January 11: Sharing her steadfast views on noteban and digital economy State Bank of India Chairperson Arundhati Bhattacharya outlined paradox of demonetisation  and digitalization for India.

Speaking at Wharton India Economic Forum 2017 in Mumbai, Bhattacharya said India cannot be a cashless society, but a less cash economy while highlighting the underlying hurdles for the same.

Despite being the head of the largest public sector bank of India, Arundhati Bhattacharya did not hailed or criticized note ban decision but focused on challenges it has posed for the country.

She sternly said: Whether demonetisation came prematurely, only history will tell.

Citing rush demonetisation has drived for digital transactions she stated, “I don’t really believe that India can be a cashless society. I always say that we will be a “less-cash” economy – that is a more reasonable goal to work towards.”

Explaining the paradox of transaction cost being conferred upon the digital users Bhattacharya said digital economy thrives on the least human intervention but presently we are at a stage where we haven’t been able to completely shun manual use and usher in the digital completely. The cost advantage of the latter thus cancels out and hinders the path to go for digital economy.

She shows her concerns on how technological revolution could minimise human intervention to the extent that it will, effectively, take away jobs from people.

Transactions will become less costly, but only over a period of time. But it is valid that until that happens, people will question why they should switch to digital if it costs them money, and that will elongate the transition,” she said.

She further points out how despite being a country where 75 percent of the total population is under 25 a sizable population still believes in the human touch, and prefers standing in queues to see their transactions physically fold out.

One of the biggest challenges for a secure digital future is the uniform division of technology across all demographic groups and in all forms of production processes, primary and secondary, points out Bhattacharya.

“In India, there are wide disparities. Focusing on increasing the internet’s bandwidth and speed under the pretext that it will boost GDP is not really enough when both its penetration is low and its distribution is unfair. We have just gone through demonetisation, and we have just seen that the very things that were meant to empower India could also be used for subverting a process,” she said.

If we try to push the digital economy too fast and that too, quickly, the abuses will then also become prevalent, warned Arundhati.

Citing example of fair-price shops where customers have adopted Aadhar-enabled technology but fail to recognise the reciepts and are thus duped she says: So, ultimately, everything has become digital, leakages have gone down, but if basic literacy is not there, we cannot promote this and expect it to have the right results. So, apart from access, basic literacy and understanding are key in truly achieving the goals of digital India,” she states.

Next technical problem for India that is a large country is how digitisation significantly disconnects the place of business from the place of consumption. It would become increasingly difficult to fix the location of the value created by this economy and apply the rules of tax. “Unless this is ascertained, implemented and perfected, our country will face revenue loss, impacting its growth and position,” says Arundhati.

“How do the virtual and physical economies interact? What are the positives and negatives that emerge from this interaction, and finally, how do we measure the contribution of this digital economy? Is GDP, as a measure, suited to measure this new economic phenomenon?” she concludes her insightful dialogue with question India seeks answer to.

Wefornews Bureau

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