There seems to be some resistance to PM Modi’s Cashless India initiative. I have received this message in almost every WhatsApp group that I am a part of:
Q: What’s wrong with Cashless Transaction?
A: Sir, think that a 100 rupee note is circulated 1,00,000 times. It will have the same value. Nobody will get any commission. But if it is circulated through cashless way, each transaction fetches 2.5% commission; that means 1,00,000 times 2.5% = 2500%, i.e., Rs. 2,50,000 (Rs. Two lakhs fifty thousand Rupees) to service providers like Paytm or Jio Money etc., just for this one hundred rupees. So, it’s a perpetual golden egg laying goose gifted to the gang. That’s why this is the Mother of All Scams.
I fail to understand why the educated people of my country are propagating this kind of scepticism. Either we are all corrupt by nature or lack common sense. Unless Spectrums worth 25 Billion Dollars are sold for less than 2.25 Billion, I see no “scam”. I, in fact, see this as an opportunity:
Here’s what ACTUALLY happens when you circulate a 100-rupee note 1,00,000 times:
- Anywhere between 5-24% VAT goes unaccounted in more than 50% cases, which means at least Rs. 5/- to Rs. 24/- tax is denied to the country’s exchequer. So, between 5 & 24 Lakh Rupees worth of Commercial Tax is evaded. Cashless Transactions prevent this.
- Though the real number is much higher, as per IT Norms, the lower ceiling of profit margin is 8%. On every turnover of Rs. 100/-, at least Rs. 8/- is profit. Considering Conventional Estimate (i.e. lowest tax slab of 10%), around 80 paise had to go in tax, which is evaded in most cases. For a Rs. 100/- note changing hands 1,00,000 times, at least Rs. 80,000/- of Income Tax is avoided. Cashless Transactions prevent this, too!
- True that the 100-rupee note will have the same value, but after changing hands 1,00,000 times, it has facilitated transactions worth Rs. 1,00,00,000/-. It is not just a 100-rupee note. In an ideal economy, the currency-GDP ratio should be 2-3%. India had a GDP of 125 Lakh Crore in 2014-15. Cash should have been less than 4 Lakh Crore. At over 14 Lakh Crores, it was soaring at over 11%. This much cash should not have even existed in the first place! For all practical purposes, see if you can hold any note in your pocket for 11 days without spending it in regular course.
- Coming to cashless service providers, if Rs. 100/- is circulated through cashless routes, each transaction fetches 1 to 2.5% commission; that means that 1,00,000/- to Rs. 2,50,000/- for every transaction worth Rs. 1 Crore. Why should we pay? The government was fast in finding a solution.
UPI – The One Solution for Cashless India
The government has introduced the UPI (Unified Payments Interface). UPI is a new channel for free cashless transactions. This app is free to download, free to use, & all transactions are free. It is free of ads, too! Remember! You are not bound by PayTM, Jio Money, etc. It is our own discretion whether to be “Golden Egg-Laying Geese” to cashless service providers or switch to this brilliant alternative provided by the government. UPI serves all purposes provided by these cashless service providers such as PayTM, Jio Money, etc.:
- Instant payment from mobile phones
- Available round the clock 365 days a year
- Single App accessing different bank accounts
- Single Click Two-Factor Authentication
- High Security, uses a “Virtual Address” instead of sensitive details such as Credit/Debit Card number, Account number, etc.
- Online Bill Sharing for accounting purposes
- Merchant Payments (similar to POS) using a Single App
- Scheduling PUSH and PULL Payments for various purposes, such as bank instalments, insurance premiums, etc.
- Utility Bill Payments (such as phone bills, electricity bills, etc.)
- Over the Counter Payments (to specific merchants based on virtual address)
- Barcode (Scan and Pay) based payments, similar to PayTM bar code feature
- Donations, Collections, Disbursements are Scalable
- Raising Complaint from Mobile App directly
- Instant refund in case of failed transactions
The government has launched a new web page for promoting Cashless India. This page has all details of UPI. Most of India’s major banks have already enrolled with UPI. More banks are joining this platform. All members of the State Bank Family will join after merging with SBI. Follow this link for the complete list of banks.
So, please do not believe any politically motivated propaganda, WhatsApp forwards, etc. & try to adapt to the change instead!
I believe that the RBI must make it mandatory for all banks to enrol in this service. The government had, in fact, started an alternative to even RTGS & NEFT transfers much earlier in 2010 itself. This is called IMPS (IMmediate Payment Service). It requires no separate app, works on your banking platform, is much cheaper (Rs. 5/- per transaction on SBI Online Banking), has all features of UPI, & is available 24×7, even on bank holidays.
Be a part of the solution, not the problem.