India Cash/GDP ratio is 12.24% which makes it one of the largest cash based economy. But there are certain problem for a cashless economy especially for India as :
- ‘ There is low penetration of internet. Last mile connectivity especially in rural sector is quite low which creates hurdle in digitisation of economy.
- Lack of financial inclusion due to low bank penetration is another issue. According to a report, 221 million accounts are in inactive state.
- Another issue is of theft issue. Debit card fraud are increasing.
- According to Transparency international report, India is placed at 76th rank out of 168 countries . Hence, corruption is a major problem.
- Rural economy still runs on cash. Hence it is difficult to implement cashless measures.
Impact on informal economy:
- It will push informal sector to go for digitisation like payment of wages. SO additional cost in the long run but might be beneficial in the long run.
- It will help to streamline the data and will help to consolidate data. So our parameters and indexes will reflect true picture.
- Government with employees having account can provide bsocial security benefits like pension, health insurance etc.
- It will help to increase the tax base. As informal sector will come under the vigilance of taxation authorities
- In the short run it might lead to unemployment.
