Prime Minister Narendra Modi’s controversial demonetization initiative has greatly accelerated India’s trajectory towards a cashless society, noted panelists at the U.S. India Business Council’s annual West Coast summit.
Andhra Pradesh Chief Minister Chandrababu Naidu and Aruna Sundararajan, secretary of the Indian Ministry of Electronics and IT, received awards for “Transformative Leadership” at the U.S. India Business Council’s annual West Coast summit held here May 8.
“He is a tremendous leader who gets what digital can do for his state,” said USIBC chairman John Chambers, who also serves as the executive chairman of Cisco. He noted that Naidu has set an ambitious target of 12-15 percent economic growth rate per year, which would double the state’s residents’ income every five to seven years.
In her keynote address, Sundararajan hailed the demonetization scheme, implemented last November, in which Rs. 500 and Rs. 1,000 notes were abruptly taken out of circulation.
“In 2013, 55 percent of India’s population was financially excluded. Post-demonetization, India’s digital payment system has doubled with 3.2 million points of sale, a world record,” said the secretary, noting that 250 million more people now have access to digital transactions, but mindsets must now change, so that the population uses less cash, she said.
“We had been advocating for years for India to implement more digital transactions. We woke up Nov. 8 to a definitely less-cash society,” said Demetrios Marantis, senior vice president of global government relations at Visa.
Marantis noted the advent of Bharat QR – launched in March – in which consumers can use their smart phones to scan and pay for a transaction, rather than swiping a credit card. “This is great for merchants and customers,” he said, noting that the acceptance rate of digital transactions has grown by 15 percent since demonetization.
Marantis also noted a new program that would allow drivers to simply “tap and pay” at toll plazas across the country, instead of handing over cash“India is charting the course for developing economies to go from cash-pay to less-cash societies,” he said.
Patrick Gauthier, vice president of external payments at Amazon, said India’s move towards a cashless economy has helped small and medium businesses to bring their goods and services to the marketplace via companies like Amazon, which manage the digital transactions. “Customers can get access to far more selection,” he said.
Gauthier said he was excited about the passage of the Goods and Services Tax bill, which – he said – reduces barriers to accessing e-commerce. He also praised demonetization, saying it has quadrupled the number of electronic forms of payment. “Transactions must be really, really simple. You must make it easy for people to get on board,” he said.
Sri Shivananda, chief technology officer at PayPal, concurred, noting that transactions must be seamless on both the customer and merchant side. “You have to create trust in the systems,” he said.