)
The role that technology plays in the economy has become so integral that it can’t be ignored, said a recent report by the World Bank. According to the report, electronic payments can save over one per cent of India's gross domestic product (GDP).
"Cash may still be king at times, but compared with electronic payments, cash payments are inefficient," it said in the World Development Report 2014.
According to the multi-lateral agency, the rising use of payment by electronic medium can help save 1.6 per cent of India’s GDP. "Cash can carry significant handling and transportation costs, and run the risks of theft, loss, and counterfeiting." This means that if we take the size of India's GDP which stood at Rs 1,00,20,620 crore in 2012-13, India could save Rs 160,329 crore thanks to electronic payments.
The report stated that individuals and small firms that make use of this technological medium benefit from convenient online authorisations, easier record keeping, and the availability of dispute resolution mechanisms.
"Importantly, electronic payment instruments must be linked to a deposit account either at a deposit-taking institution (bank) or in the form of e-money that can be used by banks, other financial firms, or mobile network operators," the report noted.
It added that electronic payments can help manage fraud and leakage risks in government payment programmes and thereby improve transparency and accountability.
The report also conceded that electronic payments involve certain risks which can dampen consumer confidence.
It also mentioned how electronic transfers can help contribute to the economy in the form of remittances. According to World Bank, India is set to receive remittances worth $71 billion in 2013, the highest among countries.
