Friday, 24 June 2011

38 Responses to Plastic Money Makes India Another USA?

Speaking about India and its financial scams, new theories have been making rounds and experts are trying to come up with suggestions which can curb the corruption and fraud in the nation. Now, one of the common propositions being made by them is the usage of plastic money. As such, there are the regular users of credit card, debit card, cash card etc but given the population of India, the percentage of such users is highly negligible.

Though it is being insisted that by bringing black money out India will become like USA, it is not just about black money, even the mindset of people should change. Why USA is successful is not because of absence of black money, it is because of the self discipline of the individuals and how the citizens abide by the law and follow the basic regulations. A simple act of paying the right taxes or not resorting to defaulting in payments is good for starters.

Coming back to the point, if the system insists and encourages the use of plastic money, there will be a significant change. As such, the usage of fake currency is ruled out. Moreover, plastic money means accounted money in the bank which obviously will go through the tax scanners. But in order to create an environment of using plastic money, it is imperative that there must be a strong infrastructure and network which will motivate the citizens to develop trust on such form of transactions.

While the usage of plastic money brings good amount of advantages, they come with few underlying requirements. It is not just about the technical equipment, it is also about creating the apt mindset. If USA is where it is, a lot of contribution has come from the government in terms of implementing the rules without corruption. So, a change has to happen from the system in a democratic environment like ours that will eventually create the change in the society as well. What more is needed to improve then? Definitely, the scams will not happen like it is happening now.

I see here people are comparing India to US which itself is incorrect. Managing people of around 30 crore is way too easy compared to 110 crore. First we need to clear the hurdles that are in the way of introducing plastic money before talking about its advantages.

I have gathered few points:

Literacy Rate:
India considers a person a literate if he can read and write, is of age above 7yrs whereas in US this age limit is at 15yrs. India has the largest illiterate population than in any country on Earth.
India literacy rate is at 74.04% (world’s average is at 84%) Studies in 1990s stated that India would reach that mark in 2060 if it maintains its literacy growth rate till then which is reducing decade by decade.

Poverty Line:
According to a 2005 World Bank estimate, 41.6% of the total Indian population falls below the international poverty line of US$ 1.25 a day (in nominal terms Rs. 21.6 a day in urban areas and Rs. 14.3 in rural areas) which is estimated to be a third of the world’s poor. This number is more than the total population of 26 poorest African nations.

Bottom line:
How many of these people can afford a bank account with a minimum balance and a debit card ?? Even if they manage do that, how can they manage a bank account being an illiterate ?? We know how sincere the people are in helping out others.
What I feel is this problem is not as simple as it appears. There is a lot more to it. I just hope that the solution put up in this blog turns out good and serves for a better India .

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