With the state about to be a test bed for
India’s drive to digital payments, alarm bells are ringing in the city of
Panjim
By Vidhi
Doshi
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A fish market in Goa,
where the state government is backing a drive for digital
payment systems.
Photograph: Alamy Stock Photo
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It’s 11 o’clock, and Laxman Chauhan still
hasn’t sold any fish. His stall in the central market in the west Indian city
of Panjim has been open for three hours, but none of his usual clients have
come today. He checks his watch, and then takes a walk to see if other vendors
have had any customers. “Sold anything yet?” he asks Ramila Pujjar, who has set
her stall up with a glistening display of the morning’s catch. She hasn’t
either.
“I’m losing 2,000-3,000 rupees (£23-£35) a
day,” says Chauhan. “I’m throwing fish away every day.”
The low footfall at Panjim’s fish market is
unusual; fish is a staple in Goan cuisine but, for the past month, since the
prime minister, Narendra Modi, abolished the 500 and 1,000 rupee notes,
business has suffered. “I’m losing money because of the government,” says
Pujjar. “The government only takes care of the rich, the poor will always be
poor.”
Modi’s surprise announcement wiped out 86% of
the nation’s currency overnight, leaving the vendors at Panjim’s fish market to
suffer heavy losses. “Nobody has cash, so they’re not buying fish.”
Panjim is no different to the rest of India.
Long queues wind around banks and ATMs in every city as people scramble to
exchange their high-value banknotes. The cash crisis has hit millions of
traders, as people tighten purse strings and save up precious banknotes.
But now, this sleepy tourist town is going to
become the laboratory for a radical new experiment. From January, Goa’s
government has announced that the city will go “cashless”, meaning every street
vendor, rickshaw driver and shopkeeper must offer their customers the option to
pay using a debit card or mobile phone. The cash-free drive will attempt to
close down India’s thriving parallel economy of untaxed cash transactions.
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A government circular at the beginning of the
month instructed traders: “Goa is likely to become the state in India to go for
cashless transactions from 31 December. Even though cash transactions are not
being banned, it is in the interest of the government to encourage cashless transactions.”
The policy, announced by India’s defence
minister, Manohar Parrikar, is in line with Modi’s vision for a cash-free
India. Last week, the finance minister, Arun Jaitley, announced a series of
discounts on digital transactions for petrol, railway tickets and insurance
policies. Modi has urged young people to support his “less cash” economy in a
radio broadcast: “I need the help of young people in India … There are many
people in your families or neighbourhoods who may not know how to use technologies
such as e-wallets and payments through mobiles. I urge you to spend some time …
to teach this technology to at least 10 families who may not know it,” he said.
For the last two years, Modi has been
encouraging digital transactions through his flagship digital India and smart
cities schemes, but the de-monetisation fumble has resulted in a new emphasis
on card and mobile payments, as government mints fail to keep pace with demand
for new currency. Digital payments, he says, will prevent the use of illegal,
untaxed “black money”, which fuels crime, corruption and terror.
In the last 50 years, since debit-card
transactions were first introduced by banks, they have overtaken cash in much
of the western world. But digital payments are also spreading in unexpected
places, such as in Kenya, where 25% of its gross national product flows through
a mobile payment service called M-Pesa, and Zimbabwe, where debit-card machines
are increasingly ubiquitous after devastating hyperinflation made banknotes
worthless.
Speaking to the Observer, Siddharth
Kuncolienkar, a member of Goa’s legislative assembly and the incumbent Bhartiya
Janata party, said the move towards a cash-free Goa would have long-term
benefits for its citizens: “This is bold move by the government. Goa will be a model
state and now we are all working in the direction to make that happen. No
society can be 100% cashless, but what we want is that the facility to make
cashless payments should be provided by every single vendor.”
The push to make Goa go digital comes before
state elections, which will be held early next year. Government officials said
last week that Goa was well equipped to be India’s first cashless state because
the majority of Goans had bank accounts. But in the city’s central market,
where most traders only accept cash, this seems a faraway dream. “I don’t have
a mobile phone,” says Pujjar. “There are eight people in my family, and we have
one phone between us. It is not a smartphone. How am I going to take payments?
They want me to use a card machine?” she says, making a swiping gesture with
her hands, signalling the absurdity of the idea. “I don’t know how to do all
that. Who buys fish with a credit card?”
Chauhan says: “We are poor people. I am not
educated, I don’t know how to use all these machines. Tomorrow, if the
government says you have to use this card reader, I’m going to be fooled.
Someone else who knows how to use the machine will punch in the wrong amount
for the transaction. How will I know whether they’ve paid me the right amount?”
To help Goa go cashless, state-wide
programmes are being rolled out to help people learn to use digital systems.
“Groups of people are learning how to use card readers and mobile payments in
classrooms,” said Revati Mazumdar, chief executive of Goa Electronics, who is
overseeing the drive. “Government officials are going with bank employees to
all the main places in the city to teach people how to make digital payments.
Already we have set up 40 kiosks,” she said.
Last week, the government’s plan to go cash
free hit a roadblock, after Aires Rodrigues, an anti-corruption activist and
lawyer, filed a petition with the state’s human rights commission saying the
move was unconstitutional. “The state government does not have the jurisdiction
to do this. They cannot tell vendors they have to accept digital payments. And
Goa does not have the infrastructure to make digital transactions work. Power
failures are routine, and phone signal is very weak in many places. You can’t
make debit card payments without signal.”
Rodrigues argues the vague wording on the
government’s circular indicates that officials will be able to penalise vendors
who do not offer digital payments. “Our defence minister has crazy ideas and
this is one of his crazy ideas. Cashless is impossible in India. It can never
happen,” he said.
Goa’s chief minister, Laxmikant Parsekar,
said that vendors would not face penalties if they failed to offer digital
payments, and that the 31 December deadline might be extended. But Kuncolienkar
said that the government was still pressing on with its cash-free policy by the
new year deadline, and that officials would make spot checks in markets to
ensure vendors were offering cashless payments to their clients.
“Why not?” he said. “Cashless is better for
everyone. We have already done training with the auto-rickshaw union and the
motor pilot association.”
But Faiz Ahmed, the head of Panjim’s motor
pilot association, said no training had been given to his union members yet.
Kuncolienkar has promised that by January people will be able to buy fish with
a debit card. The vendors at Panjim market are less certain. “It’s impossible,”
says Chauhan. “Look, I’m with the government. I support Modi. I want what’s
best for our country. But I can’t use those machines. I just can’t.”
