Exactly a year ago, on the evening of 8 November 2016, Prime Minister Narendra Modi announced in a surprise broadcast that beginning midnight, currency notes of Rs 1,000 and Rs 500 were denominations to be pulled from circulation, and would be rendered invalid for any transactions. On 7 November this year, ANHAD, a non-governmental organisation run by the social activist Shabnam Hashmi, and 32 other organisations released a report titled Demonetisation: Exorcising the “Demon.” Over January and February, ANHAD conducted a survey of 3,647 respondents across 21 states and union territories in the country, on the public perceptions of demonetisation, and its aftermath. In addition to the findings of the survey, the report also includes the analyses of several issues that arose out of the policy decision, such as its effectiveness in dealing with the initial goals of eliminating black money, counterfeit currency, and terror financing; the government’s shifting narratives on the motive behind demonetisation; and the impact on people across the country.
In the following excerpt from the report, PVS Kumar, a retired scientist who was formerly working with the premier national research and development organisation the Council of Scientific and Industrial Research, analyses the government efforts towards establishing a cashless economy, and the related concerns that arose out of demonetisation. Kumar notes that, “Going digital should be a choice of the citizen, the consumer and not the government's dictate.” He adds, “Eliminating this choice is excluding those who cannot or do not wish to go digital.”
The big difference between cash payments and other “digital /electronic” payments (the so-called cashless payments) is as a service fee—paying by cash is free at the point of use. When I pay you in cash, neither of us incurs a fee for my settling my account with you by handing over notes or coins.
For using e-payments, a fee needs to be paid for every transaction, over and above the cost of a good/service that we wish to exchange. This fee is usually charged to the vendor, or sometimes the buyer (when insisted by the vendor). The transaction charge is usually in the range of 2–2.5 percent of the cost of the good/service. Apart from an additional source of revenue flow, the main reason the RBI [Reserve Bank of India] wants to get rid of cash is the sense of anonymity cash transactions provide. Where that anonymity is used by criminals and tax evaders, then the state should punish such actors, but criminalising everyone because we use cash would be illegal and unethical. Government and RBI can act as a Big Brother—a panopticon—recording everyone at every transaction, when these are done through electronic payments, sometimes in real-time, when the credit/debit cards we use are also geo-tagged.
The attorney general of India has even claimed before the Supreme Court that Indian citizens have no constitutional right to privacy. Given the situation, the spectre of a cashless economy is scary indeed. Most of us do need the comfort of anonymity that cash provides, even while carrying out legitimate and harmless businesses. It will require a fair amount of informed debate before the privacy rights of citizens can be properly worked out, and it will definitely be premature to consider going cashless before such a debate can happen. The government needs to clearly spell out the technical standards and the legal measures required to ensure the protection of privacy of its citizens, even from the government itself. The possibility of electronic mass surveillance on all monetary transactions does not augur well for civil liberties and democracy. Loss of privacy is the biggest threat, in addition to risks of loss of money due to hacking/data-security, etc. India does not have effective regulatory mechanisms governing the use of electronic payments/payment gateways, which can infuse trust among the consumers toward use of these mechanisms. In the absence of these institutional mechanisms, coercing citizens to go cashless is taking away the freedom of the citizens.