Cashless Villages: A Fleeting Fad Or The Face Of A New Digital India

By Author: dibyaprakash
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While most of India seems to be happy handing out paper money for small and large transactions alike, a handful of villagesare penning a defining chapter in the making of India’s ‘cashless economy’. Cashless villages as they are called, rely on plastic money and online/mobile payments for their everyday transactions. Albeit initial hiccups, these villages have been successful in minimizing their dependency on cash to a large extent with initiatives from government bodies and banks.

From the country’s larger perspective, its sustainability and benefits throw open a lot of points that are debatable. In this article, we evaluate these angles, in the light of the success stories that these villages have recorded.

A for Akodra

The proud feat of being India’s very first cashless village goes to Akodra, located in Gujarat's Sabarkantha district. Adopted by ICICI Bank, the village has witnessed a rapid wave of modernization including Wi-Fi access, CCTV coverage, an ATM booth and a tablet-savvy aanganwadi.Almost every adult in Akodrahas a savings bank account with ICICI. And today, for the ...
... 1200 people who callAkodra their home, most everyday transactions, whether it is buying a packet of biscuits or selling milk at the local co-operative, are carried out with a few clicks on their mobile phones.

The Changing Face of India’s Hinterland

Akodra is not alone in paving the way for India’s digital future. In the aftermath of the demonetization drive, several other villages have also taken the bold step of going cashless. Currently, there are six villages, including Akodra, that have bravely gone digital – Dhasai in Maharashtra, Ibrahimpur in Telengana, Dharmasagaram in Tamil Nadu, and Basti of Maner, Bind Toli of Kurji and Patsa Village of Bihta, all in Patna.

As mentioned earlier, banks are playing a key role in heralding this digital revolution. ICICI Bank in Akodra, Bank of Baroda in the three villages in Patna and Andhra Bank in Ibrahimpur are working closely with local administrative bodiesto briskly implement changes necessary for this economic transformation.

While the end objective might be the same, there are differences in the transaction models being implemented in these villages. For instance, the villagers of Akodra rely on mobile banking for their day to day transactions, while inIbrahimpur and Dhasai, all shops including provision stores, have been provided with point of sale (PoS) machines or EDC machines, so that everyday purchases can be made with the simple swipe of a card.

The Modi Government on its part has launched a number of initiatives to promote cashless transactions in both rural and urban India, noteworthy among which is the BHIM app. Named after Dr. Bhimrao R. Ambedkar, and based on the Unified Payments Interface (UPI), the BHIM app allows users to send and receive money to other UPI accounts or virtual addresses. The stand out feature that gives BHIM the edge over payment apps like Paytm andMobikwik is its ability to be linked directly to multiple bank accounts.

But how do these changes in the payment ecosystem really benefit the common man?

The Case for a Cashless Economy

The move towards a cashless economy raises a cache of concerns for India.Among other things, the low literacy rates in rural India and infrastructural limitations like patchy internet access and inconsistent power supply are hurdles on the path of India’s digital dream. However, the question that needs to be asked is whether the challenges outweigh the benefits of digitisation, and how does the growth in cashless transactions fuel the economy. Let’s take a closer look at some of these benefits.

Minimal maintenance

Given how the RBI spends crores printing currency notes, cashless economies directly help in the reduction of the costs borne by the government. Besides, it decreases process and labour driven costs incurred in the operation and maintenance of numerous financial institutions.

Transparent taxation and book keeping

While there is no way to put a number to the black money centred transactions that are running in India, it is safe to say that it accounts for a significant percentage of the economy. Digitization makes transactions accountable, thereby obligating all parties involved to legitimize their transactions. This transparency can go a long way in mitigating corruption.

Banking for all

Despite the numerous drives that the government has championed, personal banking in India is far from being ubiquitous. However, mobile banking is likely to change this by bringing banks closer to the people. This way the focus can steadily shift from generating prototype transactions to actually nurturing prolific bank users in rural India.

Cashless villages like Akodra are a great example of how access to technology can bring about social and economic change. However, the dream of a truly cashless economy for India can only be accomplished in tandem with infrastructural developments in rural areas of India. But with mobile and internet penetration at an all-time high, we can honestly say that real change is just around the corner.

Author : The author of the post is Dibya Prakash. Dibya Prakash is a technology consultant, strategist and mentor. He consults and mentors different enterprise teams on high-end & emerging technologies. More about him on LinkedIn.