About 950 million Indians are out of reach Internet. How competent are we to become cashless economy and how to improve the present situation?

cashless economy
Image courtesy: turianlabs.com

India’s economy surpassing the economy of England created quite a buzz in the media, recently. Given its large population, the GDP of India exceeding a developed nation is no great deal. At the same time, India’s per capita income is very low. These contrasting Indian truths are reflected in other major areas including the ambitious goal of making India a cashless economy.

Post demonetization announcement, the BJP government announced many ambitious plans such as digital payment and cashless transactions. How far are we ready to attain a cashless economy? Here is a reality check.

India has approximately 74% literacy rate as per the 2011 census.  Again, the difference in rate of literacy in rural and urban area is quite high. Out of 1.252 billion population, only about 220 million Indians have smart phones. Similarly, approximately 25 million people have credit cards and close to 662 million people have debit cards.

According to a recent study jointly conducted by ASSOCHAM and Deloitte, mobile data plans in India are among the cheapest in the world and the average retail price of smartphones are steadily declining, yet the Internet is out of the reach of nearly 950 million Indians.

However, a piece of slightly good news is internet penetration in India is increasing.  The access to affordable broadband, smart devices and monthly data packages is required to spread digital literacy to make their ends meet, revealed the study titled ‘Strategic national measures to combat cybercrime,’ jointly conducted by ASSOCHAM and research firm Deloitte.

Moreover, the challenges before India are very complex and multi-layered. The question is not only one the affordability of internet or the means to operate the transactions and creating awareness, it is also about encouraging habit of digital transactions among people and ensuring safe transactions as well.


What should be done to improve the present scenario?

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The study suggests the following measures will help to achieve the desired goal of cashless economy

  • Existing government infrastructure assets should be further leveraged for provision of digital services at remote locations. Digital literacy needs to be increased by providing institutional trainings in schools, colleges and universities; accelerating partnerships with global technology leaders and using the workforce trained under Skill India to impart trainings.

  • Digital literacy needs to be increased by providing institutional trainings in schools, colleges and universities; accelerating partnerships with global technology leaders and using the workforce trained under Skill India to impart trainings. An integrated approach between Digital India and Skill India needs to be constructed to design programmes and impart training.

  • The government should increase awareness regarding the value add of technology to increase technology adoption. The benefits of technology such as increase in the standard of living of the weaker sections of society and enhancing financial inclusion should be communicated to citizens.

  • Private sector players should be incentivized to develop infrastructure, provide services and promote digital literacy as part of the Digital India program. Start-ups should be involved to create and customize apps to local needs to increase adoption of digital technology, adds the joint study.

  • India has over 1,600 languages and various dialects. In areas where people only use local languages, integration of local language and technology is required to drive digital literacy.

  • Fear of cybercrime and breach of privacy has been a deterrent in adoption of digital technologies in India. In order to encourage people to switch to digital means, it is important to provide awareness and education on cyber security, risks and safeguarding of information on the internet.

  • Mobile platforms and internet enabled programs should be used to improve the accessibility of training programmes. Credibility and recognition of certifications provided by various initiatives is the key to successful development of digital literacy. Sector Skills Councils (SSCs) associated with sub-sectors should get industry inputs on curriculum, trainings and services.

  • The various stakeholders (different government programs, ministries, institutions, industries etc.) involved in imparting digital literacy need to work in coordination to obtain the most effective implementation. This will require transparency of information, workflow management and timely updates on the progress of various factions.

  • A framework needs to be defined for participation of the private sector in skill development programs which defines the role of the private sector, expectations in terms of investments, content and job guarantees.

  • Skill training and digital literacy should be introduced as part of institutional trainings in schools, colleges and universities across India. Curriculum and interactive programmes should be mandated to ensure adequate digital skills of all graduates. Skill building for Digital India Building skills required to achieve the Digital India vision.

  • India faces a severe shortage of well trained and skilled workers. It is estimated that only 2.3% of the workforce in India has undergone formal skill training versus over 50% in the developed countries. This shortage is accentuated in the electronic and digital sectors. However, to achieve inclusive growth, skilled and well-trained manpower is critical.

  • The top barriers to adoption of technologies in the economically weaker sections of society as well as in MSMEs include cost and affordability. Most telecom operators so far have not invested significantly in development of high speed access networks in rural areas. Similarly, MSMEs also have low awareness of government and stakeholder schemes that could lead to numerous benefits.

  • A key hindrance to adoption of technology is the low rate of digital literacy in India. Several initiatives undertaken by the government and other organisations are expected to improve the digital literacy rate in the coming years which will in turn result in an increase in adoption of technology and digital services.

  • While there has been an increase in localized content and applications, content still remains limited in several local and regional languages. Most applications that exist have been driven by the government. Private sector involvement remains limited to proof of concepts (PoCs) in limited test environments.

  • The speed at which digital infrastructure (especially fiber networks) is being developed needs to be increased. Existing government infrastructure assets (e.g., post offices, government buildings, CSCs) should be further leveraged for provision of digital services at remote locations.

  • Private sector players should be incentivized to develop infrastructure, provide services and promote digital literacy as part of the Digital India program. Start-ups should be involved to create and customize apps to local needs to increase adoption of digital technology.

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