Tuesday, December 13, 2016

Cashless

From the NYT story by Geeta Anand and Hari Kumar:

Somethings can be done in a Parliamentary democracy that would be utterly impossible in the US.

NEW DELHI — For a year, Ashish Kumar Mandal scratched out a living selling dumplings on the streets of New Delhi for a bit less than 50 cents a plate, until the government banned most of the country’s currency bills last month, crushing his all-cash business. In desperation, the 32-year-old took a step he had never even contemplated before: He offered his customers the option of paying electronically.

Mr. Mandal is among millions of Indians — snack vendors and rickshaw drivers, cobblers and coconut-water sellers — who are moving swiftly toward a cashless economy, fulfilling what Prime Minister Narendra Modi now says was one of his objectives in banning 500- and 1,000-rupee notes, worth about $7.40 and $14.80.

India is experiencing an acute shortage of bills to replace the large-denomination notes that were banned as of Nov. 9, and which made up 86 percent of the country’s currency. There have been numerous reports of people waiting in line for hours at banks or A.T.M.s, only to find that the machines are out of cash.

As the public struggles with too few bills in circulation, business has fallen in many sectors to a small fraction of what it was before the ban. Economists warn that India’s growth of 7.3 percent in the most recent quarter, among the fastest of any large economy, could take a hit if the cash shortage continues.

Cashlessness has a lot of advantages for a society: it strongly inhibits tax cheating and criminal activity of all kinds. Naturally, it is strongly opposed by criminals and tax cheats, but also by anybody else who values the relative privacy of a cash transaction. Europe has moved several major steps toward the cashless society, but the US lags.