India is in the throes of an unprecedented social experiment in enforced digital disruption, and the world has much to learn from it.
India’s Botched War on Cash
A case study in poor policy and even poorer execution.
December 14, 2016, Updated December 14, 2016
Summary.
In November 2016, Indian Prime Minister Narendra Modi demonetized 500 and 1,000 rupee notes, effectively removing 86% of cash out of circulation in a cash-reliant society. This has created a chaotic environment for both consumers and merchants and put a pause on transactions ranging from real estate deals to weddings. Once the shock dies down, however, will we find that the government’s decision has an upside in relation to online payments?
India’s cash policy is an unusual form of digital disruption, brought down from the top instead of by one of the players within the mobile/online payments space. In fact, in explaining the policy, the Prime Minister said that it was time for Indian people to embrace online banking and transactions. The author argues, however, that while demonetization may be the catalyst needed to move India into the future, cash will remain king until there is large-scale government investment in Internet access and digital technologies.