MENLO PARK, Calif. – Prime Minister Narendra Modi’s controversial demonetization initiative has greatly accelerated India’s trajectory towards a cashless society, noted panelists here May 8 at the U.S. India Business Council’s annual West Coast summit.
The afternoon event featured Andhra Pradesh Chief Minister Chandrababu Naidu and Aruna Sundararajan, secretary of the Indian Ministry of Electronics and IT, who both received awards for “Transformative Leadership.” (See separate story in last week’s issue.)
In her keynote address, Sundararajan hailed the demonetization scheme, implemented last November, in which Rs. 500 and Rs. 1,000 notes were abruptly taken out of circulation.
“In 2013, 55 percent of India’s population was financially excluded. Post-demonetization, India’s digital payment system has doubled with 3.2 million points of sale, a world record,” said the secretary, noting that 250 million more people now have access to digital transactions, but mindsets must now change, so that the population uses less cash, she said.
“We had been advocating for years for India to implement more digital transactions. We woke up Nov. 8 to a definitely less-cash society,” said Demetrios Marantis, senior vice president of global government relations at Visa.
Marantis noted the advent of Bharat QR – launched in March – in which consumers can use their smart phones to scan and pay for a transaction, rather than swiping a credit card. “This is great for merchants and customers,” he said, noting that the acceptance rate of digital transactions has grown by 15 percent since demonetization.
Marantis also noted a new program that would allow drivers to simply “tap and pay” at toll plazas across the country, instead of handing over cash.
“India is charting the course for developing economies to go from cash-pay to less-cash societies,” he said.
Patrick Gauthier, vice president of external payments at Amazon, said India’s move towards a cashless economy has helped small and medium businesses to bring their goods and services to the marketplace via companies like Amazon, which manage the digital transactions. “Customers can get access to far more selection,” he said.
Gauthier said he was excited about the passage of the Goods and Services Tax bill, which – he said – reduces barriers to accessing e-commerce. He also praised demonetization, saying it has quadrupled the number of electronic forms of payment.
“Transactions must be really, really simple. You must make it easy for people to get on board,” he said.
Sri Shivananda, chief technology officer at PayPal, concurred, noting that transactions must be seamless on both the customer and merchant side. “You have to create trust in the systems,” he said.
At an earlier panel, Ravi Aurora, senior vice president and group head at MasterCard, said e-commerce initiatives have helped farmers throughout the world bring their goods to the marketplace and get a better price for their products. The buyer, agent, bank, and farmer are brought together, enabling the sellers – who often cannot leave their farms – to have greater transparency in the sale of their goods, he said, adding that payments are also more efficiently handled.
The earlier panel also discussed means to enable entrepreneurship in India. Moderator Parag Amin, director and chief mentor at iCreate, a business technology incubator based in Gujarat and established by Modi, noted that India is adding one million people to its work-force each month. “There is tremendous opportunity here,” he said.
Anupam Jalote, CEO of iCreate, noted that the organization has reached out to 80,000 young entrepreneurs in the three years since its inception. “We’re pulling the brightest minds to provide solutions to India’s needs,” he said, noting that the organization was founded and created by entrepreneurs.
Varsha Rao, an Indian American investor and board member of NextGen, which provides a platform for Indian companies to engage in corporate social responsibility initiatives, noted that there is a huge need to skill India’s population for jobs in the current economy.