Digital India-A year after demonetization

Summary

Digital transactions in India went through a sudden jump due to the demonetization initiative which was undertaken by the government in November 2016. The notes in circulation to GDP ratio fell from 11.9% in October 2016 to 10.4% in October 2017. The use of m-wallet, a pre-paid payment method has more than doubled. The use of debit-card and credit card at the point of sales(PoS) have both gone through significant increases in the last one year. However, India still remains a cash-intensive economy. Even after the demonetization initiative, cash withdrawal from ATM far outweighs the use of debit and credit card at point of sales(PoS). The note in circulation to GDP ratio is also creeping up. It has risen from 9.8% to 10.4% in the past 3 months. It will be such a disappointment if the ratio returns to the pre-demonetization level. Unless India makes a continued effort on its digitization, the progress it made at a huge cost of demonetization could be reversed.

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