The Union cabinet’s approval on Wednesday for introducing steps that will encourage payments through digital means, moving India towards a cashless economy, is welcome. Finance minister Arun Jaitley may delve into some specifics regarding this in the Union budget.
A cashless economy will help track the flow of money and reduce tax avoidance, apart from improving overall efficiency in the payments system. True, digital and card payments are likely to remain urban-centric for some time because of inadequate rural infrastructure. But the benefits will percolate with the spread of technology and changes in regulations. And the cabinet’s nod to steps for promoting mobile banking transactions is likely to help rural penetration.
Currently, India has an unusual preference for cash, and its ratio to gross domestic product is one of the highest in the world. The reasons for this are not difficult to understand.