Sunday 18 December 2016

Cashless economy will be a disaster

Cash is empowerment, freedom, privacy & security.

Cashless society is at least 25 years away for fulfilment of following requirements:
  • Basic education
  • Banking education
  • Technology education
  • Smartphone requirement
  • Electricity for charging
  • Internet or 3G connection
  • Net Banking wareness
  • App to be downloaded
  • Knowledge about secure operation
  • Privacy and security cyberlaws
  • Grievance redressal knowledge
  • Awareness of perils
  • Cost Benefit analysis
  • Above all mindset
Fully cashless society would mean the end of privacy . There would be a digital trail of every action you take through your purchases and transfers. In the absence of robust privacy laws and data protection in India, it is a big worry every week as we hear stories of hacking.

A fully cashless society could mean the end of dissent. The government can use any data it gathers against you. Even if you commit no crime, there is much you may be embarrassed by. What's more, they could make any opponent a pauper with one keystroke, freezing your bank account while they investigate alleged misdeeds. Just the fact that they have this power could have a chilling effect on dissent. Would you want government men have that much power on you for presumptive reasons?

It is a myth that an advanced society must necessarily be cashless. In Germany more than 80% of transactions are in cash, as citizens safeguard their privacy and freedom. In the US, 45% of transactions are in cash. Even in advanced, wealthy & small countries like Norway & Singapore cashless transaction are just 60% only. In India, 600 million people have no bank account, and less than 20% of all Indians have a smartphone. Internet penetration is iffy. Trying to make India cashless is akin to putting a bullock cart in an F1 race.

Technologies, like any App, imperil our privacy. But those actions are voluntary, and we can choose to avoid them. That is the crux. Coercion towards cashlessness with deprivation of currency implicit in the demonetization is ridiculous. A cashless society would only be good if we evolve towards it, not if we are forced into it.

Digital payments involve transaction costs, are unreliable because of infrastructure issues. After demonetization who would trust an Indian banks and RBI? The beneficiaries of forced cashlessness are not consumers, but vested interests like banks and payment companies. This might be the largest redistribution of wealth from poor to rich in the history of humanity.

When the demonetization was announced, Modi & BJP said it was meant to attack black money and counterfeit currency. Once it became clear that those reasons were nonsense, they tried to change the narrative into a cashless economy. Within a fortnight of that, they are already backtracking and saying they meant `less cash' instead of `cashless'. The truth is that the demonetization was a humanitarian disaster that is crippling our economy, and no matter how many times Modi and gang try to rationalize it, it cannot be done. These men will stop trying when they cannot justify any more, they will distract.

The best government is that governs least.

My View:
Anything by force undermines individual freedom & rights guaranteed by constitution. When people see reason, benefits, security, affordability etc they themselves will adopt to cashless transactions voluntarily. Until then it is only a commodity with a price and government has no right to promote any body's business on its citizens forcibly. 

How government will enforce tax compliance is altogether different issue. This is no right way.

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