The ongoing digital push and encouragement of cashless transactions would boost the country’s gross domestic product (GDP), said Arjun Ram Meghwal, Minister of State for Finance.
Addressing a conference on ‘Digital & Cashless Economy: A New Paradigm for NexGen businesses’, organised by the Confederation of Indian Industry (CII), Meghwal said these steps would address the ‘shadow economy’, which is quite significant in the Indian context.
He also said that India was on the verge of a transition from a large cash economy to a less cash and digital economy. Meghwal said the move to demonetise was in accordance with the “general will of the citizens of India towards a corruption free society”.
Meanwhile, a Deloitte paper on ‘Demonetisation and merchants’ has noted that merchants , especially micro and small merchants, are a critical group in India’s leap towards a less cash society. They also are a key segment of India’s high cash to GDP at 10.6 per cent.
Hence, in the journey to a less-cash society, one that focuses on a reduction in the cash-to-GDP ratio to single digits, and in the digitisation of India the inclusion of the micro and small merchants is an important factor. Small retail units or mom-and-pop stores account for 92 per cent of the retail market, with over 15 million merchant units.
The Deloitte paper has suggested two mechanisms to drive digital adoption among merchants — creation of a common merchant helpdesk (e.g. 14444 helpline) and setting up of an acceptance development fund (ADF). The ADF could be used to subsidise the cost of merchant acquisition by the participating banks and other institutions, it suggested.
ADF can be used to drive training of micro and small merchants, acquisition, onboarding and post-installation dispute handling activities, the paper added.
‘Job opportunities’ Umang Das, Chairman, CII National sub-committee on Telecom Infrastructure, said that “lot of back up such as digital infrastructure is needed” for citizens to adopt digital payments in a big way.
“Digital literacy is also very much a necessity. This will also create job opportunities”, he said. Digitalisation and demonetisation intent is right and in the long run, this will boost GDP growth, he added.