Essay on positive and negative impacts of cashless economy

Free 570 words Essay on positive and negative impacts of cashless economy for school and college students.

The drastic digitalization over the past few years has indeed affected almost every sphere of our lives. One of the most recent effects has been the move towards a cashless economy in India. Starting with the note ban in November 2016 due to the sudden withdrawal of the notes of Rs.500 and Rs.1000 denominations from the economy overnight, the Indian economy is going cashless. In other words, least paper transactions will be involved, substituted by more digital transactions with the help of internet banking, digital wallets, Point-of-Sale machines, credit and debit cards, etc. These are having multiple implications on the economy with the following advantages and disadvantages.

Essay on Positive and negative impacts of cashless economy

Read More: Essay on positive and negative impact of ban of Rs500 & rs1000 in India

Advantages: Cashless economy is definitely a wise move, given the fact that it provides the following advantages:

  • A cashless economy will allow less tension of tackling a wallet full of notes along with us, which is not at all safe in a world full of anti-socials. We can rather use our mobile as a one-stop solution for all kinds of transactions such as bill payments, fees payments, funds transfer, recharge, etc.
  • It will ensure a ‘black-money free India’ or rather the so-called ‘parallel economy’ where people bypass the banks to gather money in their closets at home without coming under the purview of tax will suffer a setback.
  • Crime rates have already started diminishing due to cash ban as most of the terrorist activities are funded with black money that has bore the brunt of this. In addition to this, other crimes such as burglary, extortion, bank robbery, etc. are also declining.
  • One of the biggest advantages is the increase in the span of the income tax. Due to least involvement of cash, transactions have to be done through banks where proper KYC verifications will be done prior to banking transactions and hence, it will be easier for the Government to monitor and mend the income tax evasion by the unscrupulous persons. This will, in turn, enhance the revenue received by the Government.

Above all, the cashless economy will lead to the most convenient and secure economy for all.

Disadvantages: Apart from the brighter sides of the cashless economy, there are also some darker sides associated with it as explained below:

  • The cashless economy will see a hike in the hacking of the personal information over the internet such as credit and debit card numbers, PINs, passwords and other sensitive information due to an increase of digital transactions. In short, cyber crimes will escalate like anything if proper internet security measures are not taken.
  • The poor section of India who is in majority and is scarcely covered under conventional banking system will suffer a lot, as they are solely dependent on cash for their daily wages.
  • Sectors such as real estate, retail, restaurants, cement and other MSMEs, where huge cash transactions are involved are going to be affected terribly.
  • Inadequate internet infiltration, low internet speeds, limited smartphone and broadband penetration, very less PoS machines are the roadblocks towards achieving full digitalization that is here the main substitute for cash transactions.
  • Funds will always be in control of the third party such as Government, banks, payment interfaces, etc. which lead to extreme uncertainty.

In short, a cashless economy can only be possible with sufficient infrastructure and planning that are required for supporting an economy like India.

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15 thoughts on “Essay on positive and negative impacts of cashless economy

    1. Manojakrishna K N

      Why Modi is blamed here?
      Modi government has halved the income tax for lower tax slabs.
      In 2017 budget, anonymous political donation has been brought down from 20,000 to 2000 rupees & political donations were never taxed before.
      Banking transaction tax is much better option than income tax since it gives less scope for corruption/leakages + less burden on middle class.
      Modi government is doing a praiseworthy job here.

      Reply
      1. Mohd Modassirul Haque

        Brother you got obsessed with Modi and Modi conspiracy
        You are not thinking that, is INDIA corruption rate decreases because of NOTE BANDI, is there poor people get there money which MODI has told them in their previous debates , is there any changes in bank system and many more …
        There are many such examples which I can give you
        Such a biggest threat VIJAY MALLYA, Ambani etc.,
        There are about 1000 of people who got account in Swiss bank why not he catch them……
        Just focus on it????????

        Modi play plan plotting game in which only common people grab!!!!

        Reply
        1. Ajeet

          at least something has been done. If common people will not take black money then what is the purpose of money in the swiss bank. For india it is of no use
          Think about this

          Reply
  1. Ajaya Sahu

    Total cashless transaction is possible when banking electronic transaction systems are hacking free. Otherwise public will fear for that.

    Reply
  2. Sunil Singh

    Digital transactions shall be mandatory in all sphere of economy and for this certains things required:
    1). A strict law to enforcement digital money transactions with fast track dispute settlement mechanism.
    2). Infrastructure facilities at grass root level.
    3). People shall be educated about digital transactions with its benefits.

    India is moving toward digital transactions as per globle trend but need more efforts from all institutions of society.

    Reply
  3. Renny Jacob

    I think if we interpret the word “Cashless” Economy to “Less Cash“ Economy, many of our concerns will be minimised. Nobody in the world expect 100% cashless life, but limit the cash for smaller denomination transactions like less than 500 or maximum 1000. Then it is a less cash economy.
    I believe 80% or more of Indian families spend less than 25000 Rs a month. So, are the channels and politicians are crying for the remaining 10-20% who want more than 1 lakh a month (4×24000 weekly limit).?
    Why do a few, so called economists ,say that “Even America got only 75% cashless transaction and so India can’t”. India is considered as the Top 10 Economies in the World, and predicted that India will be 2nd or 3rd in next 10 years. So all these changes are part of that progress, and let us make a mind to adapt those changes rather than only discussing the negatives.
    The population of India in the age-group of 15-34 was 430 million in 2011 !!! As per latest reports, India got more than 1 billion mobile connections. Let us start at least with this small (really BIG) bunch of people, rather than resisting for every change.
    When you demand for only cash transaction, you are knowingly or unknowingly promote
    • Bribes in lakhs of unaccounted money ( Then again we all conduct big lecture against bribe)
    • Fake currency (don’t forget the discussions on container full note from Pakistan)
    • Terrorism (un accounted cash is necessary to run terrorist activities)
    • Looting, burglary and even pick pocketing (If no big time cash is kept in your house or wallet ,which thief will come to you?)
    • Sales Tax Scam (Most of the retailers collects tax from the consumers and do not pay them to govt by showing low sales figures. GST would be an alternate for this)
    • etc
    Govt / Banks should promote E-Cash/valets by offering 0 service charges to customers and by giving redeemable points and random surprise gifts.

    Reply
  4. Manish Pandey

    Great initiative. Going cashless boost economy as cost of managing paper money is high. It will not only dethrone terrorism & criminals but also cut down the paper consumption and saves our life saving trees.

    Reply
  5. Ajeet

    From my point of view India should become totally cashless economy .This will also promote our Digital India as well as it provide knowledge about internet .If people have to survive they must have knowledge about internet.
    It will decrease bank robbery,extortion etc.
    Evasion of taxes will get reduce ,it create good economy and all illegals crime will not become zero but it will definitely get reduced.
    Today the developing country like India is important to minimise all the crimes to competite with other country like U.S .

    Reply
  6. don...

    It’s good that modi has done not ban but also everyone is looking further n is in favour for modi decision ..it is good but what about poor people who doesn’t even don’t no that what is paytm n all electronic devices… most of the people are dying because of lack of money if u did note ban than u should also think abt. Poor people

    Reply
  7. Arvind yadav

    What poor….????? Who is poor….. everyone has become rice in last 3 years. Our honourable prime minister asked us to give just 50 days and now look at India……… It is the India of our honourable p.m dream…..just perfect.

    Reply
  8. sumit kumar

    how can u say india is perfect it’s just as it is only few changes has occur since this step has been take

    Reply

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