Reams have been written both for and against demonetisation; so much so that it has been the reigning topic of discussion over chai and samosa since the day it has been announced. That is all we can afford to buy, really, because we are keeping our Rs. 100 notes for emergencies and getting change for the Rs. 2000 is a problem only for those fortunate enough to have one or two in their possession. While the aim of curbing black money is laudable and deserves all our support, the execution of the demonetisation drive could have been better.India has historically been and continues to be a cash-intensive economy. Some estimates even suggest that more than 95% of transactions (volume) and 65% (value) are in cash. Number of of PoS (point of sale) machines is not even one-tenth of the estimated number of merchants in the country. As per data released by RBI, in India, as on August 2016, all banks put together had only 2,02,801 ATMs and 14,61,672 PoS machines (machines on which you can use credit and debit cards to make payments instead of cash). India has roughly 26 million credit cards and 697 million debit cards.
Considering that the tech-savvy generation owns at least 4-5 cards per individual, and the fact that many of the cards issued remain inactive or are used less than five times a year, the reach of what are called alternate channels of payment is much lesser than the number of cards issued would suggest. In fact, as reported by Live Mint in April this year, India’s average number of card transactions per inhabitant at 6.7 is one of the lowest in the world. In Australia, the number stands at 249.3, in Canada it is 247.9, in the UK it is 201.7, Brazil 54.8, and it is 16.6 in Mexico and 14.4 in China. Data analysis also suggests that in India, there is a huge gap between number of ATMs and number of POS machines.
According to ‘Card Acceptance Infrastructure – A Concept Paper‘ released by Reserve Bank of India earlier this year, use of debit cards at ATMs (i.e., primarily for withdrawal of cash) constitutes an overwhelming 88% of all debit card transactions, and “usage of debit cards at PoS machines accounts for only around 12% of total volume and 6% of total value of debit card transactions.” RBI noted with concern that the growth of card acceptance infrastructure was lagging far behind the growth of the number of debit and credit cards in the country. Such growth as has been seen in the growth of necessary infrastructure was mainly concentrated in urban metro areas. RBI has gone on to list out the reasons for this – high cost of acquiring business, low utilisation of cards, lack of adequate and low cost telecommunication infrastructure (needed even for the much-in-news Paytm), insufficient awareness, lack of incentives to merchants for accepting cards, and the perceived cost of Merchant Discount Rate (MDR).
In such a situation, suddenly declaring 85% of cash available in the market as illegal is causing tremendous hardship to the lowest strata of the society which is going largely unreported or reported as one-off instances of ‘collateral damage’, a dangerous phrase one does not want to hear in association with our own citizenry.
Somewhere in the public discourse on this matter, a more disturbing development is creeping into mainstream media. That is the dissolution of the distinction between the State and the Government. The nation-state of India, to which we belong and which gives us our national identity, is distinct from the government which happens to be in power at any given point of time. Simply put, governments may come and go, but the State – the idea of India – endures and provides the framework for our democratic polity. Now, however, if one has any objection, any dissenting point of view, any critique of the actions of the Government, immediately one is branded as anti-national and scoffed at, ridiculed and abused for not supporting the anti-corruption drive of the Government.
The fourth estate, the media, is supposed to be the watchdog of democracy. In a country with democratic values, we are supposed to have the right to express our opinion in a civilised manner. Dissent is supposed to be a cherished right of the citizenry in a democracy. Our soldiers, who are being often highlighted as patriots making supreme sacrifices for our country – which they are – are making those sacrifices precisely so that our cherished democratic values may flourish.
Expressing a minority opinion has almost become equal to a criminal offence. Never mind that the real criminals are those dealing in black money. Never mind that a miniscule percentage of the black money transactions are actually in cash. Never mind that money and cash are not synonymous words. Never mind that we have equated hoarding with black money, forgetting the essential definition of black money being money (not cash) obtained through illegal activities. Never mind that in our country, a large number of legal, genuine transactions which used to happen in cash are stuck now because a whopping 86% of the cash in circulation became useless one fine day. Never mind that there is no system in place to deal with such an emergency.
Because that is what it is, an emergency.