The first is that the vast majority of Indians are part of the informal, unorganised economy. About 400 million Indians are daily wage-earners earning less than Rs 300 a day. In addition, there are millions of workers in industries like plantations, beedi-making, traditional crafts etc, where employment is uncertain and wages are low. Many of these workers are illiterate or only semi-literate. Millions of self-employed Indians are itinerant vendors or hawkers of different kinds of commodities like vegetables, fruit, clothes, household goods etc, or providers of services of different kinds (puncture-repair, cycle-repair, mechanics, dhobis, tailors etc). All of them are dependent on cash in the form of wages and payment. Most of the payments involve very small amounts. Providing credit is also an important part of the system in which they operate and survive. It is impossible for the people belonging to these sections to do without cash. In fact, it is they who have been hit very hard by the enforced cash crunch that Modi’s note withdrawal has induced.
More than half the population of our country is still dependent on agriculture not only as farmers, agricultural labour, pastoralists (herders) and suppliers of dairy products but as providers of services to the farm and dairy sectors and as members of the rural work force engaged in a large number of occupations. The needs of all these people can only be met by access to cash. Digitalisation is not a viable option for them. In fact, villages that have been announced as having turned ‘cashless’ with lots of fanfare have proved to be homes to very poor people who do not even know what digitalised transactions mean. Lanura (Jammu and Kashmir), Badjhiri (Madhya Pradesh), Ibrahimpur (Telangana), Jhatipur (Haryana), and Jariya (Chhattisgarh) are all villages that have been declared ‘cashless’. According to a December 23 report in Hindustan Times, in none of these villages are cashless transactions taking place. The reasons given by the villagers are lack of smart phones, inadequate banking facilities, bad connectivity etc.
Digital payments are dependent on the possession of smart phones. Only 20 percent of mobile phone owners own smart phones. Ownership of smart phones is restricted to people with a minimum, fixed income and a certain level of education. Recent instructions from the RBI to make cheque payments to tea garden workers whose sufferings due to demonetisation had been widely reported have, in fact, increased the workers’ problems. Almost none of them have a smart phone and more than 90 percent of them do not have bank accounts. In addition to this, there are very few banks in the area. This situation is not unusual.
Lack of the necessary access to smart phones and digital platforms, however, is only part of the problem. It is also a fact that most parts of the country suffer severe power shortages. Obviously, without power there is no question of internet connectivity. Even where there is power, internet connectivity is extremely unsatisfactory.
Digital payments do not come cheap. They cost between 0.6 percent to 4 percent of the value of the transaction. This is a huge, arbitrary and unfair imposition on the poor who are being forced into the digital market-place by the enforced non-availability of cash and the ‘benefits’ of digitalisation that they are being promised. Of course, it is the companies providing digital services that will be the greatest beneficiaries of the government’s policies. Of these, it is Paytm that is being promoted the most aggressively by the government and its institutions.
The government, however, is proceeding with its bulldozing. Recently, it announced that it would make all the 3 lakh ration shops in the country completely digital by March 2017. At present, only 38,000 have been digitalised. If this threat is carried out, it would constitute the most inhuman and brutal attack on the right of poor people to cheap ration.
Online fraud is a big danger inherent in digital transactions. Recently in October this year, more than 32 lakh ATM accounts in our country were hacked. Safety measures are sub-standard and India is rated as being highly prone to digital fraud.