After the demonetisation of India's 500 and 1,000 rupee banknotes, the Indian government is stressing the importance of digital transactions in a bid to help the country transform into a cashless economy.
Government policy think-tank Niti Aayog CEO Amitabh Kant has predicted that that cards, ATMs and POS machines would become redundant in the country by 2020.
"India is in the midst of huge disruption in the world of both financial technology and in terms of social innovation (there is) huge innovation and this disruption will enable India to leapfrog and by 2020 my view is that in the next two-and-a-half years, India will make all its debit cards, credit cards, all ATM machines and POS machines totally irrelevant," explained Kant.
Kant was addressing a session on ‘Startups and innovations which have social impact in India' at Pravasi Bharatiya Divas 2017, a three-day mega event involving Indian diaspora.
"They will all become redundant in India, and India will make this jump because every Indian will be doing his transaction just by using his thumb in thirty seconds."
Kant added that the government was pushing for digital payments in a big way and this was a huge disruption with several innovative methods. "India has created a back end in terms of biometric which will enable India," he said, highlighting recently launched BHIM app and Aadhar enabled payment system initiatives.
BHIM (Bharat Interface for Money) is a mobile app developed by National Payments Corporation of India (NPCI) based on Unified Payment Interface (UPI) launched by Prime Minister Narendra Modi to faciliate e-payments directly through banks. It was launched as part of the 2016 Indian banknote demonetisation and cashless transaction drive. With the Aadhaar Payment App, another initiative of the government, allows users to make cashless transactions through multiple bank accounts.
While India is the only country with a billion mobile and billion biometric, it is largely a cash driven economy.
Kant added that despite demonetisation and focus on digital payments, only 2% to 2.5% of Indians pay taxes, so India needs to move from a non-formal to a formal economy.