India is becoming a cashless economy, faster than one would have thought possible. Growth of ?currency with public?, or cash in hand, in August 2007 over January 2007, has declined sharply to 4.70% from 10.02%, say Reserve Bank of India data.
This has happened because people like Girish Mendhe, a project leader at Wipro Technologies? Bangalore campus, rarely use cash to make purchases. He does most of his transactions electronically, keeping only a miniscule amount of cash in hand. For Mendhe, who owns four debit cards and four credit cards, it makes sense. His tribe has grown fast.
With an increasing number of Indians lapping up financial products, electronic payments are swelling and use of cash is coming down. It also indicates the rapid pace at which the country?s financial system is growing. The government is particularly happy with this trend as this means more expenditure is showing up on the tax information network. In fact, the rise in the number of cards is directly related to the rise in tax collections, which is surging at a massive 25% plus rate over the past couple of years.
This has been accompanied by the swift rise in the electronic payments gateways. For example, retail electronic payments made with debit or credit cards grew at over 80% in January-June 2007 (to Rs 1,49,579.28 crore) over same period last year (Rs 82,793 crore).