Dear Mr. Jaitley,
You have brilliantly diagnosed one of the biggest diseases in the Indian economy - black money. And identified the right treatment - digitization - to bring the patient out of coma. Unfortunately, it looks like you've got a set of butchers instead of expert surgeons on the job.
The average Indian on the street, like most of us, is not against digital money. Nor is he a black-money hoarder. Most Indians just want to go about their lives paying in the simplest & cheapest possible way. All the pundits who eulogize the Aam-Aadmi's love of hard cash and fear of digital money are either underestimating the Aadmi's intelligence or too caught up in their own ideology. The likes of WhatsApp, Uber, and many others have proven, that people will figure out how to use technology if it makes their lives easier.
As we all wait with bated breath for the Union Budget, below are seven suggestions that are completely within your purview, and I sincerely hope that some of these (if not all) will be implemented.
1. Evangelize UPI - UPI is the biggest fintech innovation that the WORLD has seen in the last 30 years and all INDIANS should all be proud of it. But a serious media/publicity campaign needs to go behind educating people. It is hard enough for those of us in the tech industry to fully comprehend the working of UPI, let alone the average man on the street.
2. UPI Acceptance in Government - Make all (central) government services accept UPI within the next 90 days. The challenge right now is that there are not enough acceptors of UPI. Moreover, once the government starts accepting and implementing UPI, it will become easier for people in the country to trust the technology and will help in increasing its adoption.
3. UPI Subsidy - The best way to increase adoption of UPI is to not only declare a 3-year window where the MDR is zero but also perhaps go one step further. Let us find a way for people to do 100 transactions on UPI. After that, it will become a habit. For every UPI transaction, reward the user by a Re.1 cash-back, with an annual limit capped at Rs. 100 per aadhaar number. Merchants will follow the money and the rest will be history.
4. Card usage - The 2-factor authentication has single handedly made it extremely hard for anyone and everyone to use debit or credit cards online. Though RBI has recently announced a waiver for low value transaction, it has been watered down and not really implemented by anyone.
5. Data Privacy & Security - It is only going to take a handful of security breaches or user-error or fraud apps with BHIM or UPI for the entire media to scream murder and throw the baby out with the bathwater. In any large-scale system, it is not an "if" but a "when" and the actual rate of fraud. These nuances will be drowned out when this happens. Yet, we don't have online data privacy laws or clearly stated rules of recourse. Not passing these quickly is begging for a backlash.
6. Leave innovation to entrepreneurs - BHIM app is, better than most private bank apps. But Banks are not exactly the fountains of innovation in the country. While RBI & NPCI can provide the regulatory framework & security architecture, innovation and adoption will come only if the million entrepreneurs in the country can develop UPI apps. Which today, they truly cannot since any serious app involves a Bank PSP to cooperate.
7. Re-invigorate Startup India - It's time to admit that most of the grand plans announced last year at Startup India has not gone anywhere. Mainly because they involved government actively doing things like the Rs. 10,000 Crore fund that remains mostly unspent. You'll save a lot of money by just scrapping the whole idea and instead remove the archaic and arcane laws that entangles startups in red-tape. iSpirt, Nasscom and others have listed sensible changes that doesn't cost the exchequer anything and yet makes our lives easier.
We're going through an extraordinary transition. Putting these finishing touches will put India at the top of the digital pantheon!
Bala Parthasarathy is Co-founder & CEO at MoneyTap