Associate Professor, JIMS, kalkaji
In November 2016,The Prime Minister of India, Mr. Narendra Modi made an announcement of demonetization of high denomination currency notes. After five year and four months of demonetization, India’s digitalization of the economy in forms of payment, online banking and automation applying digital media powering the digital economy, promises to make India an empowered society. There have been various incentives provided by the Government of India aiming toward achieving the goal of a digital economy. The approach and attitude of Indians towards this new wave of digital revolution, plays a vital role. But in rural parts of India, there are many restrictions to adapt to these revolutionary changes, because one fact cannot be ignored that India, which is an Agro-based country, has many heterogeneous groups of people dwelling and transacting in many spheres. This fact makes it difficult to deal with digital payment and cashless living in the country.
INTRODUCTION
All the financial transactions which are to be done electronically are known as E-payments, without using or involving any cash and cheque in physical. It is an online based payment system, done through the internet. In the E-payment system a person can make transactions (make payments, transfer of funds, booking anything online,etc) to another person or business without involving any physical cash, without minding the time, location and the amount of money. With this kind of advancement of technology and growing internet’s popularity, buying and selling goods & services online have been increasing exceedingly, over the past few years, resulting in the need for a robustE-payment system.
Around 70 per cent of the Indian population live in rural areas, and they contribute a keyproportion in the growth of the country’s GDP. People living in remote areas and villages lack in the technological skills which are most necessary when it comes to the e-payment system. The Government of India should encourage the concept of ‘Smart Villages’ along with ‘smart cities’. With the advancement in services of the banking sector various easy methods of payment have been developed like RTGS, NEFT, Mobile Banking and Internet Banking but in rural areas the majority of people are unaware of this system.
To understand factors that are affecting the smooth transition. Let’s understand the following points:
- Rural Literacy
India, a country of 139 crore people in it, where only 35% of people lives in the urban areas, which contributes about roughly 63% of GDP, while the remaining population live in rural areas, that are 65% of total population, who contribute only 27% to the GDP. With the majority of 65% in the rural areas, they are underdeveloped with no modern education of the age, still too far from the digitalization. There is a huge potential lying there, which can lead India to its vision of a $5 trillion economy in recent upcoming years. The Indian government started many initiatives intended to fill this “digital literacy gap” and make India a digital empowering society.
- BANKING STRUCTURE
Banks play an important role in the digitalization transition. After 8 November 2016, over 2 crore accounts were opened in a month throughout the country. The Finance Minister has asked once again to all the banks for opening these no-frill accounts to ensure that unorganized sector workers, including daily wage earners, have access to formal banking channels, a step that will help the government’s agenda towards the digital economy.
Table 1: Number of accounts opened after Dec 2016- Feb 2022
| Bank types | Number of Beneficiaries at rural/ semi urban areas | Percentage |
| Public Sector Banks | 22.03 | 73.7182 |
| Regional Rural Banks | 7.14 | 23.8955 |
| Private Sector Banks | 0.70 | 2.3427 |
| Grand Total | 29.88 | 100 |
Source : Pradhan Mantri Jan DhanYojana
- COST OF UPGRADE
On the very day when demonetization happened, banning of 500 and 1000 rupees did give a huge setback to the economy. Urban area people are educated and lean toward the idea of a digital economy using digital payment, as they have the means for it, like smartphones, computers, and technology & have the education to understand it and do it properly. On the other hand, in rural areas there is nothing like that, literacy rate is low, 50% of people don’t have their own phone, not even smartphone, those who have the phone, out of them most of them have keypad 2g phones.
Conclusion
A change in perception as well technical advancement is required in rural areas to help them adapt to e-payments structure.Rural India has noteworthyinfluence on the economic advancement of the country, and with the emerging variations of ICT penetration, effect of demonetisation, together with the digital initiatives announced for rural segments, the necessity of refining the digital payments model in rural India is very significant.
JIMS Kalkaji organizes a number of workshops, seminars, webinars and guest lectures for PGDM and PGDM(IB) students by eminent industry leaders and experts on Inclusion of Rural Digital economy and Digitization in the Rural Areas to acquaint the management students about the status and promotion of digitization in the rural areas.
# jims #jimddelhi #managementcollegesindelhi #pgdmcollegesindelhi
#toppgdmcollegesindelhi#digitalization #rural banking, # customer services, # information technology #payment systems
