An announcement by Prime Minister Narendra Modi on 8th November 2016 shook the nation. He called for a demonetization and took a decision to remove a majority of the currency notes in the country with immediate effect.
There have been different views about demonetization—many call it the worst decision taken by the government, whereas there is a substantial percentage of people applauding the move. This move boosted digital payments greatly.
India’s move to digitization
The paradigm shift from cash to plastic money to digital payments is not as seamless as it sounds. However, most Indians were open to accepting different methods of making payments and using the zero balance savings account, a banking initiative taken by the government.
A large number of businesses have been impacted due to the introduction of demonetization; although larger benefits are expected in the long run. There is an increased awareness as well as acceptance of digital services and people are actively using digital wallets on their smartphones. If not for demonetization, it would have taken three more years for debit and credit cards to reach the current level of usage. The partial withdrawal of currency led to the gradual shift towards digital payments. Various payment applications like BHIM, Paytm, Kaypay, and Mobikwik have been largely downloaded across the country. The digital payment companies have seen a significant rise in their businesses in the past one year. Individuals prefer to use these services as they are convenient and also offer a large number of beneficial schemes to the users.
Building a digitally empowered country
No doubt there has been significant growth in India’s digital journey and demonetization has played its part, but there is a long way to go. With the introduction of Aadhaar, the government has tried to link the bank accounts, mobile phones, and income tax returns with the most important identity document. Additionally, the zero balance savings account introduced by the government has reached out to every corner of the country.
Demonetization is definitely a boon in many aspects. But, one cannot be indifferent to the challenges. Internet connectivity remains a problem in the rural areas of the country, which needs to be worked upon. For a mega change in the economy, people need to have an uninterrupted access to the Internet and they should be educated about the use of digital wallets and payment systems.