The Information Technology (IT) trade body, the National Association of Software and Services Companies (NASSCOM) has said that the government’s recent decision to withdraw Rs 500 and Rs 1000 currency notes from circulation will accelerate the push towards electronic payments system, which currently has relatively little penetration in India. Nasscom President R Chandrashekhar said that if most of the black money is brought into bank accounts or into the tax net, there will be far less reason to deal only in cash and far more reasons to transact through electronic payments.
Nasscom said that this decision is a welcome move for the e-commerce industry, where a large number of deliveries in India are 'COD' or cash on delivery, raising logistics costs and risks. While other reasons for use of cash, such as trust, may take longer to alleviate, the present announcement could mitigate a significant factor driving COD, the availability of unaccounted cash. It further said that this move will be a major hollow to unaccounted or 'black money', rendering it as valueless unless it is deposited with the bank to it get exchanged, potentially bringing it into the tax net.
However, IT trade body pointed out that the replacement of not functioning old Rs 500 and Rs 1,000 notes with new high denomination notes in due course could be a ‘potential dampener’ as high value currency notes constitute the foundation of black money and the cash economy. It added that this historic step by the government could, if optimally leveraged, hugely accelerate the migration to a digital economy.
