Demonetisation: Can the Centre do more to encourage digitisation of financial transactions?

Over the past month or so, the main topic of national conversation has been about the demonetisation issue. Every citizen is now an ‘expert’, and is not reluctant to air his/her views. Each political party has settled on its own non-nuanced black or white posture.

No sensible person can seriously question that the future of India, as a nation/democracy, is bleak unless the issue of corruption and parallel economy is addressed. The demonetisation move, whatever its proximate immediate purpose, is designed to address this fundamental systemic flaw in our society and economy. The unacceptable levels of abject poverty, escalating economic disparity, coupled with poor educational and public health standards are incompatible with the ideals of a democracy, and can be traced clearly to faulty public policies followed for seven decades. Now that the first major shot to reinvent the country, and to redeem it from a downward spiral has been fired, it remains to be seen as to what the next large consequences will follow, after the initial churning is over. The expectation is that in a relatively short term, the immediate pain will subside, and the long term consequences will kick-in.

Meanwhile, we have to accept the ground realities, not keep cribbing forever, and see what further long term changes are now ushered in to consolidate this major social and economic move.

One criticism of the move has related to lack of advance preparation. This charge is not altogether valid. The fact is that over the past few years, many significant advances have been made to improve communication, digital spread, and identity creation. The Aadhaar Card system, initiated by the UPA, has been adopted by the present government with great success – the coverage even in the remotest area of Aadhaar identity is unbelievably high. Even ten years back, when the 2G scam was raging, very few would have imagined the penetration by the ubiquitous cell phone into the remotest darkest corner – with among the highest densities in the world.

The spread of Jan Dhan Accounts was treated as a joke a couple of years back – the fact is that leaving aside the children, almost all families have Jan Dhan Accounts. Digital India, with an ambitious target to cover three lakh villages was launched earlier – the programme got a major boost in the last couple of years; more than 2 lakh post offices are likely to be covered digitally in a short period of time. The use of the hand-held mobile digital transaction device, with capability to handle over 2000 transactions in one shift, even in the remotest area with no electricity or digital connectivity, capable of uploading the transactions into the digital stream on the press of a button is now a reality in most parts of India – states like Andhra Pradesh, Karnataka and Gujarat have pioneered this technology, which is rapidly used for covering the remotest area. The fact is that much preparation, quietly and unceremoniously, without fanfare has already been made in the last couple of years. Does one recall the horrible stories of leakage of MNREGA funds through unscrupulous middlemen which were in wide circulations five years back, – what happened to those stories? – the MNREGA payments now enter the accounts of the worker directly. Much quiet revolution has already taken place.

It is in this background that the question needs to be asked whether the central government mobilised all its resources in spreading the gospel of shift to digitisation in financial transactions, used all its assets on the ground and the full information machinery to support this move. In the past weeks, we have heard on the TV many experts briefly expounding on the ease of embarking on digital transactions – Amitabh Kant of Niti Aayog, Nandan Nilekani and many others have spoken of alternate means of making payments, referring to e-wallets, transfer through smart phones, use of Aadhaar Card, and indeed utilising one’s own humble cell phone for this purpose. Clearly many new possibilities are now technologically available. Why have there been no publicity blitz in the TV and other media, expounding the details, enlisting the precautions, analysing the procedures, outlining the necessary steps to reach a successful outcome. Why have these not been done in the past three weeks? It is not only the illiterate villager who is afraid of the digital transaction – even many educated city people, and large segments of the population need to be induced to use digital payment routes, explained the procedures and precautions, convinced of its safety, and with gentle hand-holding brought up to change the ways in which they make the payments. Why did we not have a two-hour tutorial, explaining the various aspects in lucid terms, understandable by a common man, prepared in the various languages of India, brought into public space? Why has not this been thought of earlier? Why only make cryptic comments about possibilities, when the state apparatus can put out TV tutorials on the Youtube, Internet, film theatres, encourage replay in every village panchayat and rural school – why have these not been attempted? This is a serious gap in the implementation of the programme – at least now this gap can be filled starting from now.

The other collateral question relates to the seemingly non-optional use of the wide-spread postal department outlets, numbering 2.5 lakhs, available in nearly every village of the country. It is well known that the postal system enjoys an excellent reputation among the various government institutions, particularly in the rural areas. Why the system hasn’t be seriously engaged to spread the message, and brought in to help in the cause of payments transfers is not clear. By its very nature of functioning, the banking structure is much more expensive in operation, compared to the postal structure, which has simpler less expensive operational procedures. Has the Postal system been fully utilised? Is there a rivalry between the Ministry of Finance and the Ministry of Posts, with the elder brother wanting to garner all the credit and the glory, even while catering to a national urgency? Has the postal department been overly pusillanimous, and conservative, and unwilling to rise to the occasion? Here is a huge national resource which has not been harnessed at this time of great need. Why has this serious neglect taken place? Some questions need to be raised, deserving credible answers?

The die is cast. We can’t roll back the past. Bold new further moves are now required to transform this country. The nation’s good wishes are with the present Prime Minister in encouraging this new wave of transformation. If one son of Gujarat (the only and original Gandhi) fathered the democracy, another Gujarati (the Iron Man) was denied the opportunity to modernise it, the ball is now with yet another Gujarati to make the nation great again within ten years!