DMPQ: Is cashless economy feasible in India? Also discuss the impact of it on informal economy?

India Cash/GDP ratio is 12.24% which makes it one of the largest cash based economy. But there are certain problem for a cashless economy especially for India as :

  • ‘ There is low penetration of internet. Last mile connectivity especially in rural sector is quite low which creates hurdle in digitisation of economy.
  • Lack of financial inclusion due to low bank penetration is another issue. According to a report, 221 million accounts are in inactive state.
  • Another issue is of theft issue. Debit card fraud are increasing.
  • According to Transparency international report, India is placed at 76th rank out of 168 countries . Hence, corruption is a major problem.
  • Rural economy still runs on cash. Hence it is difficult to implement cashless measures.

Impact on informal economy:

  • It will push informal sector to go for digitisation like payment of wages. SO additional cost in the long run but might be beneficial in the long run.
  • It will help to streamline the data and will help to consolidate data. So our parameters and indexes will reflect true picture.
  • Government with employees having account can provide bsocial security benefits like pension, health insurance etc.
  • It will help to increase the tax base. As informal sector will come under the vigilance of taxation authorities
  • In the short run it might lead to unemployment.


JPSC Notes brings Prelims and Mains programs for JPSC Prelims and JPSC Mains Exam preparation. Various Programs initiated by JPSC Notes are as follows:- For any doubt, Just leave us a Chat or Fill us a querry––

JPSC Mains Test Series 2022

Subscribe our Test Series program to get access to 20 Quality mock tests for JPSC Preparation.

Click Here for Mains Test Series and Notes

Click Here for Printed Notes (With COD)

Hope we have satisfied your need for JPSC Prelims and Mains Preparation

Kindly review us to serve even better

[jetpack_subscription_form title=”Subscribe to JPSC Notes” subscribe_text=”Never Miss any JPSC important update!” subscribe_button=”Sign Me Up” show_subscribers_total=”1″]