Cash and Digital - Double Edged Sword - MGSC

Last week I was reading an Article that Cash Circulation in Indian Economy is now 18.5 Lacs Crores. I do not know how many Zeros will be in this Figure. But considering the Demonetization Exercise's primary intention and goal was to dissuade people from spending cash and encouraging them to switch over to cashless or Digital Payment Techniques, this comes as a huge surprise to me. Maybe this is now what is called as Re monetization Exercise.

Trade Analysts say that Digital Transactions have risen tremendously post November - December 2016, be it in the Form of Debit or Credit Card Payments, Digital Wallets - Mobikwik, Paytm, PhonePe, Freecharge, PayU Money and so many are there. Also in the foray are cardless Transfers like the UPI and BHIM.

Still, the element of surprise comes from the Fact, that huge amount of Cash is in Circulation in the Economy. Bigger payments may be through - RTGS, NEFT, IMPS, Credit/Debit Cards but still the Medium Sized Transactions and Smaller Transactions are most Cash Specific. Increasing smartphone-based payments at stores could also have contributed to the drop in the value of debit card transactions, said bankers.

Transactions via the National Payments Corporation of India-run Unified Payments Interface (UPI), which allows for instant transfer of funds between bank accounts, Spiked tremendously to 189 million in May from 9 million in the corresponding month a year earlier. Merits and Demerits are available in both - Cash and Digital.

Economists say for an Economy to flourish and prosper at a good momentum and growth rate substantial percentage of Transactions should be Cash Only. On the contrary, opponents of Cash Only Mode of Transactions suggest that more and more Cash circulation and exchanges lead to corruption which ultimately gets transformed and metamorphosed into the Black Money.

Their basic theory lies on the premise that Cash and Notes specifically cannot be tracked at Micro level. Digital Supporters say and refute the Cash - Only Mindset Supporters claims by affirming the fact, any Digital Transaction can be tracked to the Micro Level as well as Macro Level.

Cash Only Group knows very well that there are risks involved in making the Economy only Digital and Cash - Less. Credit/Debit Cards are up for a huge number of risks be it in the form of Card Cloning, Card Theft, and Misuse eventually, leading to so many complaints floating in the Payment Gateways, Credit Card Companies, Merchant Establishments and Private/Public Sector Banking Partners/Card Issuers. This is truly a debatable topic. I think this is a Double - Edged Sword and one has to tread carefully.