Cash is not trash
(The all-out war on cash transactions is not wise economic
policy)
A public sector bank is the latest
to join hands in the war against cash. A report released by the State Bank of
India last week states that thanks to demonetization, India has seen a huge
increase in digital payments using cards. If not for demonetization, it says,
the economy would have taken three more years to achieve the level of digitization
that it has since November. The underlying (आधारभूत) logic is
that citizens are somehow irrationally (बिना सोचे समझे) obsessed
(दिमाग मे घर कर जाना, जुनून) with the
use of cash, and, hence, the enlightened officials in government are duty-bound
to wean (विषय विमुख करना/ छुड़ाना) them of it, even if it requires administering cruel
(निर्दयी) shocks like demonetization. Note
that it is unanimously (सर्वसम्मति से) agreed by experts that a cashless world offers many
undeniable (निर्विवाद) benefits.
In a world where all, or at least most, transactions are digital, the
government would be able to track any transaction. This would help prevent (रोकना) tax evasion (कर चोरी), thus increasing tax revenue, and also help in
dealing with criminal transactions. What is ignored is the fact that when the
government cracks down (कढ़ी कार्यवाही करना) on a
preferred method of transaction among citizens, the result is a net economic
loss to society. After all, it is not some superstition (अंधविश्वास) that holds back citizens from using digital cash.
Instead, there are often some good economic reasons for them to choose to deal
in cash over other forms of money.
Low-value transactions
For one, physical cash often
offers the easiest and cheapest way to deal in many low-value transactions. It
might, for instance (उदाहरण के लिए), make no
economic sense for small businesses to build the infrastructure required for
digital payments, or for poor households to pay the price for it. Many
businesses and consumers might automatically adopt digital technology as its
costs drop. Forcing them to prematurely (समय से पहले ही) adopt technology will only be harmful to their
interests. Two, a broad brush has been used to paint all untaxed cashbased
economic activity as a crime that needs to be punished, but it should be
remembered that cash actually allows several beneficial economic transactions
to thrive (फलना फूलना). In the absence of cash, a lot of these useful
activities would be crushed under the weight of harmful government policy. It
is no coincidence (संयोग) that many
legitimate (वैध) economic
activities get pushed into the underground economy only under draconian (कठोर) regimes. Lastly, it is worth noting that the
preference for cash among citizens has traditionally worked against the plans
of governments to pursue inflationary (मुद्रास्फीति) policies.
In fact, American economist Kenneth Rogof, a prominent (प्रसिद्ध) advocate of the war against cash, has spelt out
clearly that cash stands in the way of central banks pursuing a negative
interest rate policy (NIRP). Simply stated, if citizens are allowed to encash
their deposits to escape a situation like NIRP, it would threaten the stability
of the banking system. Cash thus acts as a natural check on inflationary
government policies. It is no wonder that cash has been turned into an evil
zombie, which it is clearly not.
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