Demonetisation: Digital transactions meet roadblocks in rural India, effects felt everywhere

After the central government’s demonetisation drive started on 8 November, fruit seller Yamuna Sahni was one of the first people to put up a board urging people to pay using PayTM. About a month and a half later today, he uses it only as the last option to receive payments. Explaining his reluctance to use cashless transactions, he says, “I can transfer a maximum of Rs 25,000 from my PayTM account to my bank account every month. So if I sell fruits worth more than that, I have to wait an extra month just to transfer the excess amount back to my bank. Though I have money, it gets blocked for a month, which means my working capital is affected.” Sahni mentioned that while he has head this limit can be increased, he doesn’t know how it gets done. Digital payments have picked up across the country in the last month-and-a-half, but the many impediments mean that the signs aren’t very encouraging. [caption id=“attachment_3166164” align=“alignleft” width=“380”]  Many small-time shopkeepers have begun accepting digital payment. Reuters[/caption] Raju Yadav, who sells paan on the streets of Noida, says he too had opted for digital payments, but is now facing hurdles. “The wholesaler from whom I get my daily supplies doesn’t accept digital money. So I need to first transfer the money to my bank account, then write a cheque to my wholesaler to clear my dues,” he said. Market watcher Bimal Jain, who works as an office bearer in the Punjab Haryana Delhi Chambers of Commerce, told Firstpost that people have started using digital modes of payments. “But we have to wait some more time before digital becomes the first option as a mode of payment,” he said, adding that cashless transactions have proliferated in Tier-I and Tier-II cities on account of unavailability of cash in accordance with demand. “Unavailability of cash has definitely pushed digital transactions in these cities. But it will take more time for digital payments to pick up in Tier-III and Tier-IV cities,” he added. But the problems faced by these towns in the country’s hinterland are felt even in the National Capital Region. Many weekly haats in Noida are considered to be good places to buy cheap fruits, vegetables and foodgrains. Most of them do not accept digital payments. Raghav Choudhury, vegetable seller in one of these markets, says he purchases in wholesale from farmers of Uttar Pradesh. While he gets his supplies from the farmers on credit, he has to repay them in cash. “If I accept payment through Pay TM, how will I pay them back, since they do not use such modes of payments?” he asks. On the other hand, many traders also believe that online payments will decrease their competitiveness. “People buy from us because we provide goods at cheaper rates. But digital payments may include service charge, which will add to our cost price and selling price,” he added. PayTM charges minimum a of 1 percent and maximum of 4 percent as service charge on transfers from wallet to bank accounts. Jain said one way to encourage more digital transactions is by making them completely bereft of additional costs. He said the government should take special precautions to acquaint people with digital transactions, especially to encourage people in Tier-III and Tier-IV cities. The Finance Ministry had launched a PR campaign to popularise digital transactions. ‘Span Communications’, a PR firm that won the campaign to make India a cashless economy said in a press release that it has come up with an ambitious plan to carry on the aggressive plan forward. CEO Naresh Khetrapal said, “We live in a country where cash is king. Considering the demographics of India, the campaign will help create awareness about cashless transactions among the masses and embrace the new methods of payments in the digital era."