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Cashless Economy Advantage and Disadvantage

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Er. K. N. Singh

Cashless Economy Advantage and Disadvantage

two man trying to move cashless economy
Cashless Economy Advantage and Disadvantage
A cashless economy is a system where cash transactions do not occur. Officially, money is transferred from one account to another through credit card, debit card, NEFT, and many other online facilities. This feature is good because the crowd of banks saves lives. But it is a hit for the developed country or countries where the economy has the cash to GDP ratio of around 5%. This ratio was around 12.42% when the cashless economy was introduced in India. In the case of cash transactions, India is at the forefront which is about 78%, whereas in other developed countries this ratio is only 20-25%. India is the fourth largest country in the world in cash transactions. India is still far behind in technology, which does not support the cashless economy on a technical basis.
When it is a different matter that the cashless economy makes cash transport easy, no storage, and easy to print. But India is an agro-based country where 70% of people still live in agriculture-based life, whose mostly work is done only by cash.

The Basics of Cashless Economy Should Boon or Ban

a man is making cashless payment
Cashless Economy Advantage and Disadvantage

 Finally, the taxpayer is going to have to pick up the bill. The government saves lots of money. It now also said that demonetization is only one of the many steps to tackle the black economy. This is precisely what I want to suggest to the government too. Folks are still not conscious of the fundamental government policies geared toward rural locations. An economy overly determined by cash harms the poor and supports corruption as it permits people to reside in anonymity and remain past the tax net. There’s an empathy deficit

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Only then it can end up being a boon for those. The arrival of credit cards, smart cards, and internet payment has supplied consumers with numerous distinct alternatives to carry out their transactions. Almost everyone within this era has mobiles. It can take over a generation to alter the practice of cash to cashless transactions. On the other hand, the idea of a cashless economy isn’t understood by many. But he said for a thriving shift to cashless model, there ought to be incentives.

UPI that’s developed on IMPS enables payment directly from your bank account in actual time. It’s far too early to write-off any one of these efforts and demonetization. Of course, the counterargument is that it might cause significant inflation once politicians put their hands right on the printing press. The uneducated villagers are still not prepared to go cashless. Economic digitization also raises the government’s capability to boost its taxation systems. This demonetization has made a string of ripples across various sectors in the nation. So at long last, we can finally escape the current financial funk.

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The high level of demonetization effects clearly depends on the length of the liquidity shocks. The trust factor is likewise an issue because many folks don’t trust digital transactions. That is why disruption of facilitation of transactions is felt whatsoever levels. The consequences, though, can be disastrous. Moreover, it has helped excluding all sorts of illegalities in the admission procedure, and it has fostered transparency.

There are institutional capacity issues. It would need a reasonable amount of informed debate before the privacy concerns of citizens can be suitably worked out, and it’ll unquestionably be premature to think about going cashless before that sometimes happens. It is going to greatly assist you in forming opinions on current affairs. As a consequence, the large part of the population in India is unaware of how to use the digital medium to transact. It’s an individual’s individual decision whether they wish to hold their money in banks or in the shape of money.

man is making cashless payment
Cashless Economy Advantage and Disadvantage
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The urgent need is to receive the private sector to begin investing. There is a demand for good awareness among them and there are lots of obstacles also. This consequently could boost consumption, GDP and inflation to cover the significant debts we’ve accumulated (leaving aside the exact controversial idea that citizens should now pay for the privilege of holding their hard-earned cash in a more liquid form after it has been taxed). Hence it doesn’t need to be printed. Going cashless will take some time and plenty of public education, Prasad rationalized. And most importantly, in rural India, several places don’t have accessibility to the internet. These are the men and women in rural places, these are the men and women in tribal places, and these are the people in geographically remote locations.

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Nearly 70% of the nation’s population lives in rural locations and the vast majority are illiterate. Let’s have negative rates of interest. Thus, it’s likely to minimize the total merchant acquisition and operating cost for those banks. This extra saving may be used to supply tax waivers to the people. We can consider this option in the close future. So it’s very problematic for them to understand digital procedures that are needed for a cashless economy.
Micromanagement of each detail of our economic lives thus is apparently inevitable. India also has an issue with access to high-speed online connectivity. Rural India isn’t yet ready for the cashless economy on account of the unavailability of basic facilities. Thus rural India might not be prepared for going cashless.
Firstly many individuals can’t access the bank due to the distance. Cash is being increasingly regarded as a curse that mankind should rid itself of. It permits payments to various merchants and vendors without the bother of typing card information or a net-banking password. Any transactions above a particular amount are going to have to be accomplished digitally. Further, a user should have a Smartphone to earn a transfer and thus the possible user base is going to be restricted to around 240 million people as of now.  

 

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