Propelled by the increasing availability of low-cost smartphones and high-speed connectivity, India is digitising faster than many mature and emerging economies. Aadhaar-enabled payment system (AePS) has enabled banks and payment companies to service poor and migrant workers. With the help of AePS and over 47 crore Jan Dhan accounts opened across the country, the government could make cash transfers to the beneficiary accounts directly through simple biometric identification methods. UPI has simplified and democratised payments and offers friction-free payment solutions to all the stakeholders. It is the world’s top performing digital payment interface that is dominating the world’s payment system, having processed transactions worth $940 billion that is equivalent to 30% of India’s GDP.
Digital rupee launched on December 1, 2022 is yet another exciting step in the direction of speeding up cashless transactions. As a currency in digital token form that is based on blockchain technology, unlike traditional digital transactions such as UPI and Paytm or Google Pay, digital rupee is a new payment method that is unique as it is a legal tender.
Due to the recent notoriety attained by cryptocurrency led by FTX and others, concerns about the stability and security of digital currencies is natural. However cryptocurrency is a decentralised digital asset and a medium of exchange without an intermediary like banks and its value is determined by the free market whereas digital rupee is a legal tender issued by the RBI and administered through its partner banks. As a legal tender guaranteed by RBI, it allows for secure transactions speedily without the need for intermediaries. Thus citizens would be able to transact with digital rupee through a digital wallet offered by the participating banks and stored on mobile phones.
In order to continue with such pioneering initiatives towards financial inclusion, support for enabling the youth and women from the marginalised segments are required to be addressed using a combination of mechanisms. Opportunities for earnings need to be dovetailed with financial reforms and digitalisation processes.
While job creation through new investments is a precursor for creating millions of jobs, enhancement of livelihoods through better match-making of products and markets, upskilling to meet the market demands, better product packaging and assisting self help groups to become active on digital platforms are some of the measures that would pave the way forward for digital financial enablement. There is also the need for continuous innovation in affordable devices and solutions as well as in designing financial products to expand the scope of financial inclusion. The promise and potential for the future of digital India has never been as encouraging as it is today!
The writer is chairperson, Global Talent Track, a corporate training solutions company