Digital India is Beyond being cash and paperless – A building block for a developed India

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It is of little doubt that transparency in public spending will auger well with social welfare and contribute to a sustainable social infrastructure growth. For many years India continued to be plagued with the menace of a closed room approach taken by different governments on public funding and expenditure. In – Fact despite the enormous growth on our nation’s technology skills and software industry we as a nation continued to be one of the lowest adopters of technology. We have built large engineering colleges, changed school’s curriculum, brought international trainers, and produced some of world’s best technology professionals and companies. But all these with a complete focus on west and foreign customers. There has not been any notable attempt to use these advents to the benefit of an Indian Citizen. Indian companies and technology professionals created Hotmail, managed NASA technology platform, became CEO’s of world’s largest technology companies, but all of them had minimal impact on our countries common man. We have contributed to global technological advancement in a big way. The pertinent question is how much have capitalized for our own growth and improving people’s life in India?

It is in this context digital India programs of current government becomes relevant. It is unimaginable, how we survived as a nation with all these inefficiencies that were built in our social infrastructure. Paying bribe and expecting huge delays have become a norm. Not long ago, we had to wait for a long 1-2 months for getting our passport after going through a very stressful experience of standing in many queues and filling up many forms. Today most of us use passport office experience as an example to quote on efficient public service. Direct benefit transfer of subsidy for LPG connections have saved more than 50,000 Crores of public money that was getting leaked through the legacy channels. Getting a gas connection was a matter of bribe, lots of paper work and sheer luck for many Indians till few years back. With subsidies being taken away from the distribution system and DBT implementation, the process has become much simpler and cost efficient. It of course drew a lots of challenges from people who were living by exploiting the legacy system.

The digital transformative initiatives in India took a broader dimension in mid 90s for wider sectoral applications with emphasis on citizen-centric services. The biggest boost in this direction happened when Digital India program was launched by the Prime Minister of India Narendra Modi on 1 July 2015. One of the prime objective of Digital India program is to connect rural areas with high-speed Internet networks and improve digital literacy amongst common people. With a stated objective of “Getting the mass of Indian citizen to adopt digital transactions” this program is helping the transformation of our economy to a digital economy. The vision of Digital India programme is to transform India into a digitally empowered society and knowledge economy.

“Faceless, Paperless, Cashless” is one of professed role of Digital India. As part of promoting cashless transactions and converting India into less-cash society, various modes of digital payments are available.

These mode are:

  • Debit/Credit Cards
  • UPI/ PPI Wallets
  • MICRO ATM’s
  • Mobile Banking
  • AEPS
  • Internet Banking

Demonetization provided a much needed push to our economy for embracing the digital transaction methods. Results are already visible with increase in tax collections and reduction in real estate prices. With an aim to promote Digital Payments and converting India to a less-cash society, a large number of policy and implementation initiatives are being taken by the Government for its procurement, service offering and disbursements. A series of reforms and amendments were introduced by government to facilitate faster migration of Indian economy to in to a digital one. A few notable initiatives are listed below.

  1. A discount at the rate of 0.75% of the sale price to consumers on purchase of petrol/diesel if payment is made through digital means.

Approximately 4.5 crore customers buy fuel at such pumps per day who can take benefit of this incentive scheme. It is estimated that fuel worth Rs.1800 crore is sold per day to the customers out of which nearly 20% was being paid through digital means. In the month of November 2016 it has increased to 40% and the cash transaction of Rs.360 crore per day have got shifted to cashless transaction methods. The incentive scheme has the potential of shifting at least 30% more customer to digital means which will further reduce the cash requirement of nearly Rs. 2 lakh crore per year at the petrol pumps.

  1. Deployment of 2 Lakh POS machines in rural villages across country.

Government is providing financial support to banks for deploying 2 POS devices each in 1 Lakh villages with population of less than 10,000. These POS machines are planned to be deployed at rural locations to facilitate agri-related transactions through digital means. This move is expected to benefit farmers of one lakh village covering a total population of nearly 75 crore.

  1. Issue of Rupay Kisan Cards

Rural Regional Banks and Cooperative Banks to issue “Rupay Kisan Cards” to 4.32 crore Kisan Credit Card holders to enable them to make digital transactions at POS machines/Micro ATMs/ATMs.

  1. Accident insurance cover for railway passengers up to 10 Lakh.

Nearly 14 lakh railway passengers are buying tickets everyday out of which 58% tickets are bought online through digital means. It is expected that another 20% passengers may shift to digital payment methods of buying railway tickets. Hence nearly 11 lakh passengers per day will be covered under the accidental insurance scheme.

Digital India program has brought out many such initiatives and reforms to make the vision a reality. On the hindsight it is also offering a massive opportunity for Indian technology professionals and start-up’s to leverage the government sponsored technology platforms to build innovative business models. Most benefited sector will be financial services. It will certainly aid the financial inclusion targets if all participants leverage the digital platforms effectively. There will be many job and enterprise opportunities created with in India. The vast Indian talent pool that has historically serviced western world and helped them to achieve excellence in managing public expenditure will now start focusing on India opportunities. With government looking to implement more aggressive reforms to ease out the constraints in doing business in India as well as ensuring access to credit for larger population section , it is imperative to create many attractive technology projects.

India had to move in to a cash less economy sooner or later as the capability to service a billion+ population through physical from would have resulted in many non-value adding practices. It is in our nation’s interest that we build a robust data base on our primary economy that is reliable. Many of our economic indicators are driven by macro-economic parameters that are derived from limited primary data. It is not that the regulator, economists or government would not like to use primary data. This is simply not available as there are no proper records on majority of our primary economic transactions. In the absence of sufficient information one would find difficult to assess the health of economy and there by a higher probability of taking wrong course of actions. Digital transactions at primary level will create massive amount of data in our ecosystem which can be used to improve credit profile of common man and also facilitate better economy data for government.

Another noteworthy benefit from this ambitious program is transparency in public expenditure .As part of e-governance programs, majority of procurements have migrated to e-tenders and service levels are being digitally monitored. Right from common utilities such as electricity, telephone etc have already moved in to better digital infrastructure. There are major savings reported by preventing leakages across these utility services. Improved governance and direct access to minsters is another important achievement of effective usage of social media. Virtual meetings have now become a common practice across government officials which not only ensures more active participation by relevant officials, but also resulted in significant cost savings by avoiding travel. Digital transactions eliminate middlemen and there are no rooms for bribery to facilitate movement of files. Today, you log in a ticket with any central government offices, there is definite response you can expect with in their promised timelines. It certainly improved efficiency of these departments by avoiding duplication of tasks apart from eliminating middlemen.

In summary, while digital India helps us to migrate faster in to a cashless economy, it also helps us to stop a significant portion of attractive jobs created in technology sector. It is time for Indian IT companies to start focusing on this emerging unmet demands from domestic market. Government will of course spend a lot, additionally there will be significant private investments as well. This program has also brought in benefits in terms of improved efficiency and better transparency in governance for citizen. A great initiative of such good intent with lots of hard work had to essentially bring in benefits and it did.

Author:
Jagadeesan TS (Ex CGM, Federal Bank Ltd.)
Managing Director
KPB Nidhi Ltd.

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