Nandan Nilekani, former Chairman of the Unique Identification Authority of India, is confident that demonetisation of old Rs 500 and Rs 1000 notes by Prime Minister Narendra Modi will help India achieve in 3-6 months what it could have done in 3-6 years in terms of the digitisation of Indian economy for financial services.
Nilekani, who was roped in as the chairman of UIDAI by the UPA government, has always batted for cashless transactions and digitisation of the Indian economy. He believes that the sudden “shock” of demonetisation announced by PM Modi on November 8, would leapfrog Indian Economy into a digitised cashless economy in the next 3-6 months.
“From my perspective, the shock to the system, I think, will give a big boost to digitisation. In the last seven years, the infrastructure for digital financial services — Aadhar, UPI the JAM infrastructure, USSD and micro-ATMs — have been laid down. What, I thought, would take 3-6 years to roll out, I now believe that, with the urgency of the matter, will happen in 3-6 months,” Nilekani said in an interview with NDTV on Monday.
Explaining his “theory” further, the co-founder of Infosys said that India is going to see a “massive acceleration of the digitisation of Indian economy for financial services” in the next 3-6 months.
For instance, he said India has about 1-1.5 million PoS (point of sale) machines installed in the last 30-40 years. The PoS machine allows card-based transactions. He said the number of PoS would “double or triple in the next 3-6 months.”
Similarly, there are about 130000 micro-ATMs, which allows people to do cashless transactions in rural areas. The number of micro-ATMS would also increase up to a million or more, he told the channel.
Talking about the pain caused to scores of people, especially the poor and daily wagers, who are still not part of the formal economy, Nilekani said, “There will definitely be some amount of short-term pain in the coming weeks. But you are going to see that this acceleration is going to benefit everybody.”‘
Despite the “pain”, he said, “you are going to see very high financial inclusion.”
When asked if India’s march towards becoming a cashless economy should have been incremental, Nilekani welcomed the demonetisation, saying India has all the infrastructure ready to transform into a cashless economy.
Nilekani had unsuccessfully fought on Congress ticket in 2014 General Election. But, in a bipartisan manner, he credited both the UPA and the Modi government for India’s rapid march towards digitisation.
He said the UPA government under PM Manmohan Singh created the Aadhaar system, but the credit for applying the Aadhaar system to so many schemes goes to PM Modi.
He further said the demonetisation and the subsequent digitisation efforts would transform India from a “data-poor to a data-rich” country. With more data on the financial transactions of citizens, it will be easy for the government to identify genuine beneficiaries of public welfare schemes.