It began with the crusade against black money. Then messages circulated on smartphones saying that the so-called demonetization (which is, in reality, replacing old notes with new) was really about crippling rogue printing presses in Pakistan that might fund terrorism in India. The narrative changes as do the regulations, causing huge distress to millions, severely denting the credibility of the currency.
Anyone should be able to take a rupee to a bank and get it exchanged for a rupee. That bond is now weakened. Some bank branches have occasionally run out of cash. Authorities set rules—the rupee can be spent in certain circumstances, at certain places, for certain amounts, in certain denominations, at certain times, if certain evidence is provided, and legitimately earned past savings may be subject to tax. And the rules change with a frequency that doesn’t show flexibility; rather, it shows unpreparedness.
And now there is a solution, the government says: go cashless. The future is digital. It also means a future of surveillance. Going cashless for large transactions is good, but it relies on fail-safe technology, telecom networks that don’t shut down, easy availability of cheap smartphones, low—or no—transaction cost, consumer willingness to create, remember, and periodically change complex passwords, and all of that presupposes functional literacy among users and their faith in the system to complete a transaction. There is an unspoken class bias.
To be sure, India’s network coverage has risen exponentially, and cellphone penetration has grown, but connectivity remains patchy outside main cities, and in many parts, the network is frequently disconnected because of concerns over terrorism or violence—Jammu and Kashmir, parts of the North-East, even Gujarat. There are network security concerns—think of the recent debit card hack.
Cashless transactions are good for consumers, but they’re better for banks, whose transaction costs decrease significantly—Bibek Debroy was not joking when he mentioned the time taken to count Rs100 notes versus Rs2,000 notes in that surreal interview with Karan Thapar, though one would think he would have heard of note-counting machines—and yet banks can charge consumers or retailers, even if by the tiniest of percentages, for the privilege of transacting seamlessly.
And the state gains something far more valuable—information. A state can monitor each transaction, significantly enhancing its power over people. Cashlessness strips anonymity from transactions. To accept that, by saying that if you have nothing to hide, what’s wrong with disclosing it to the state, is like letting the state read every email you write, each file you download, and listen to every conversation you have. It assumes that each individual is guilty and must prove innocence by being transparent, reversing the basic principle of natural justice.
India does not have proper protocol to respect data privacy; in fact the government has argued before the Supreme Court that there is no right to privacy. Little prevents one agency from sharing data with another. The railway ministry, for example, is considering monetizing passenger data.
In the fantasy world of the India Stack project, this is paradise. The wired nation would include Aadhaar (whose usage is not mandatory according to courts, but never mind); e-KYC (know your customer) that enables Aadhaar holders to share their information with others, presumably with informed consent; e-Sign, to sign documents digitally; a digital locker for safe-keeping documents; and the Unified Payment Interface, the architecture that facilitates cashless transactions.
Digital nirvana’s proponents think that linking the Aadhaar identity with a smartphone and a banking app is a good thing. But the technocrats miss the irony—their utilitarian utopia confirms the worst nightmares of advocates of civil liberties. The project’s experts say that the individual’s informed consent is paramount. But think of India’s record with informed consent in the use of eminent domain to disregard the rights of slum-dwellers and Adivasis for the greater common good. This architecture will enable the state to trace and track most moves an individual makes in life. And it will bring India closer to an Orwellian state that Xi Jinping might envy and wish to replicate.
Cashlessness can be good for people willing to sacrifice their privacy for convenience. It is great for banks which want greater efficiency. And it empowers the state in ways that can be catastrophic for civil liberties. Other societies have gone cashless not only because of easier access to technology, but also because those societies take individual liberty and privacy seriously and build safeguards. The former Swedish prime minister Carl Bildt once said if you live in a democracy you should not worry about surveillance. It sounded self-contradictory, but what he meant was that a proper democracy has checks and balances to ensure that surveillance would never be misused.
That requires trust in the system. Swedes are willing to trust their system—barely 2% of transactions in Sweden are in cash; Germans, with their history, don’t—nearly 80% of German transactions are in cash. India has neither effective data protection laws nor sound remedies for individuals whose privacy has been breached. Regardless of the party in power, has the Indian state earned or deserved such trust?
Salil Tripathi is a writer based in London. Read Salil’s previous columns at www.livemint.com/saliltripathi