Forget cash, is India going to get rid of plastic money too by 2020?

The Modi govt is banking on the BHIM app to be the future of financial transactions in India

After India’s government took 86% of currency out of circulation a couple of months ago, its main policy think-tank has a new plan for the country: rendering plastic money “irrelevant” by 2020.

Amitabh Kant, Chief Executive Officer of NITI Aayog, which helps the government formulate long-term policies, said Sunday that India was in the midst of a “huge disruption” in financial technology and innovation, which will enable the country to transition from using plastic money to mobile transactions.

“By 2020, India will make all debit cards, all credit cards, all ATM machines, all [point-of-sale] machines totally irrelevant,” Mr. Kant said at the Pravasi Bharatiya Divas event inaugurated by Prime Minister Narendra Modi in Bangalore.

“In 30 seconds flat, we’ll all be doing our transactions by using our thumb.”

The annual event is aimed at increasing engagement between the government and Indians living overseas.

Mr. Kant was referring to a new mobile app launched by Mr. Modi last week as the 50-day deadline for depositing invalidated 500- and 1000-rupee bank notes came to an end.

Mr. Modi had on Nov. 8 announced the withdrawal of the country’s largest bank notes to crackdown on corruption and counterfeiting. The move caused a severe cash shortage in the economy, although Mr. Modi said later that the problems would abate in 50 days once new bills were back in circulation.

“Give me time until Dec. 30. After that, if any fault is found in my intentions or my actions, I am willing to suffer any punishment given by the country,” he had said.

After 50 days, queues were still forming outside ATMs to withdraw cash, despite the work to recalibrate almost all of the country’s 215,000 ATM machines to issue the new, slimmer notes being completed.

“Bhim,” the new digital payments app currently allows users of Google’s Android platform to transfer money directly from one bank account to another. The government plans to link the app to “Aadhar,” India’s unique identification program. Once that is done, consumers will be able to transact by using their thumbprints to authorise transactions.

“In the next two years, the power of ‘Bhim’ will be such that you wouldn’t need a smartphone, feature phone or even Internet. Your thumb would be enough,” Mr. Modi said at the unveiling of the app on Dec. 30.

The app has already been downloaded by more than 10 million users, Mr. Modi said in a tweet on Monday.
 

He also took to twitter to tell Indians how the app was a “fine example” of the government’s ‘Make in India’ plan aimed at encouraging local manufacturing, and also the use of technology to end corruption and black money.
 

On Sunday, Mr. Modi thanked 30 million Indians living abroad for contributing about $69 billion to India’s economy through remittances and hit back at the critics of his government’s currency move.

“It is unfortunate that some worshipers of black money are calling our move anti-people,” he said.

Source: The Wall Street Journal