Educating common people about the merits of digital transactions remains a huge challenge before the nation. This has prompted the Narendra Modi government to speed up its twin strategy of establishing the communication channels with the intended populace and taking the message to them in the most simple language. Monetary incentives for migrating towards digital transactions have also being offered with more such sops likely to follow. Since migrating to digital platform would require a paradigm shift in the way people perceive the digital universe, “it would certainly be a long-drawn process. Trust needs to be built in the digital universe for adoption and continued use”, feels Sreedhar Prasad, Partner, E-commerce with KPMG India. “But the task lies well within the realm of possibility.” Privacy of personal data remains the biggest concern that the government needs to address to the satisfaction of all stakeholders.
India has about 230 million smartphone users, but many among them are not smart enough to understand the qualitative change that such a device can bring to their life. For them, the adoption rate might be faster as they have the smart device, but need a bit of tutorial. Even assuming that all the smartphone users migrate to the digital landscape fast, the smartphone as a platform for digital transactions today is possible only with one fifth (or thereabouts) of India’s population.
Analysts prescribe that efforts to digitise the economy should be applied differently for different sets of people. Over 65% (or thereabouts) of India’s GDP in value terms comes from the formal economy with stakeholders like businesses (small and big), professionals and salaried-class, with many concealing much of their real incomes. If this entire segment becomes digitized, the tax regime would become much wider and transparent. This would benefit the nation with more taxes in the government’s kitty which then can be used for many development activities. “Digitising the segment (which contribute about 65% to India’s GDP) to become cashless would be a huge success to begin with,” feels Prasad, and if the top half gets digitized, the adoption by the lower half would be even faster.” To digitise the rest (the informal economy contributing about 30% of India’s GDP), we need to educate them by using the current accepted infrastructure of post offices, panchayats, self-help groups etc by giving them a wider time horizon. The task of the government to persuade people to move towards electronic payment modes has been made a bit more challenging by rumour-mongers (who are opposed to demonetisation) who are spreading doubts among people that migrating to digital transactions would bring them into the taxation net. The government needs to dispel such misgivings quite aggressively.