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By Narayanan Madhavan

It is not for nothing that they say cash is king. As the most liquid instrument of value within the geographical reach of an economy, it has a pride of place that is hard to replace. So it is not surprising that cynics may be raising their eyebrows on Prime Minister Narendra Modi's call for a march to a cashless society – or, in his words, to a "less cash" society – last Sunday.

That he is walking his talk became abundantly clear as excise duty was abolished on point of sale (POS) machines were cut within a day of his speech and in the very week, a new high-level panel has been set up to speed up cashless deals, with Andhra Pradesh chief minister Chandrababu Naidu as a key convening member, Niti Aayog CEO Amitabh Kant as member-secretary and the father of the Aadhar unique identity project Nandan Nilekani as a special invitee.

By roping in TDP's Naidu and other opposition CMs and graciously (or shrewdly?) co-opting Congress-leaning Nilekani into the panel, Modi has a statesmanly air. Amitabh Kant, in his usual style, has talked big on removing the obstacles.

But there is much more to this than good intentions because what will be needed is nothing less than a revolution. First of all, Modi's government has to address critics who may see the cashless push as just a diversionary tactic amid opposition protests over the pains suffered by labourers, farmers and other commoners in the demonetisation drive launched on November 8. It is important to remember that demonetisation is a crackdown on tax evaders and counterfeiters while a cashless revolution is a long-term strategy that may or may not be linked to a cleaner economy.

In a nation that on last count had well under 30 million credit cards and 700 million debit cards (government says 800 million) for an economy of 1.23 billion people, the task is enormous to say the least. Usage levels are quite low.

Amid a welter of credit cards, debit cards and mobile wallets competing for public attention and a sliver of commissions from transactions, there are several issues to be addressed. After a lunch-time conversation with Upasana Taku, co-founder of e-wallet startup MobiKwik, I am more convinced the task is humongous and fraught with obstacles that the Niti Aayog-led panel would have to remove.

At the end of the day, an economy that runs 86 percent on cash needs not just a removal of obstacles but real opportunities to go cashless. Here are six hard questions that the government and the Niti Aayog-initiated panel have to address for the prime minister's call to be something more than a slogan.

Can the masses be made tech savvy?

As of now, even easy-to-use mobile wallets need smartphones. Smartphone penetration in India is about 250 million at best, while Jan Dhan accounts number around 220 million. But these sit on the opposite sides of the economic divide. The government's panacea is the UPI (Unified Payments Interface) that I call "Visa for the masses". Though this is supposed to make it easy for all because even simple GSM phones can be used to make payments by being linked to Aadhar IDs, evangelising this and getting people to overcome cognitive barriers and safety fears will take time. As Ms. Taku told me, many smartphone users still are on three-year-old Android phones, and operating on pre-3G EDGE networks. Can semi-literate villagers handle UPI on GSM phones? How soon/not?

Are security layers safe?

Kant is simply shrugging off security-linked fears but we are in a framework where mobile wallets interact with credit card details -- or may have to. Is there a safe back-end certification for safety? What is the guarantee? With servers buzzing and interacting with a slew of instruments including e-wallets, debit/credit cards and online accounts (not to speak of the increasing use of data-mining and e-commerce apps interacting with money instruments), the maze is a complex one. Leapfrogging is simply not an option. Government accounts have been hacked in the past.

Is there over/under regulation?

If security issues need more regulation, interoperability between instruments may need less. Current RBI rules do not enable payment from a PayTm wallet to a MobiKwik account and vice-versa. The rupee is a generic currency that touches us all. When branded e-wallets are involved, absence of smooth transfers may inhibit usage. The word "common currency" exists for a reason. Will too many instruments and options confuse the hell out of the market? Do regulators need to step in so that security and convenience are increased while confusion is decreased?

Can the public sector walk its own talk?

It is great to see excise duty cuts for POS machines and big picture speeches from above. However, as Ms. Taku explains, every public sector entity has its own freedom in adopting mobile wallets. We can extend that to other instruments. Easy on-boarding of electronic money instruments will need common templates set up to accelerate the usage. The experience of the government involving painful wrangles in introducing the common goods and services tax (GST) seems like a vague rehearsal in front of what might lie ahead in doing something that will touch billionaires and rickshaw pullers alike.

How will intermediaries make money?

High-end merchant establishments and hotels may love credit/debit cards but milkmen and vegetable sellers don't. They have to become electronically literate and then pay charges to accept cashless deals. But why should they? What is the incentive? The current rush to go cashless is based entirely on the cash squeeze caused by the "surgical strike" demonetisation. The current waiver of charges by mobile wallet companies is temporary. When the dust settles, every intermediary needs to make money with valid reasons. How is the government going to address the ecosystem issues?

What is the economic case for cashless deals – really?

The government wants to go cashless to crack down on black money so it can monitor more deals. Seriously that makes it easier for the taxman, not the market. Fear cannot be an incentive. The market needs a real economic case to go cashless. For decades, real estate was considered the best investment because prices never went down (even now they are only mostly staggering ,not plunging, despite high interest rates). Realty thrived on cash deals in black while stocks yo-yoed. A new government study says 20 percent of rich Indians account for 45 percent of income. The skewness is symbolic of how tax evasion is worth the risk because returns are higher in cash deals kept away from the government. In a market economy, there is only so much policing and raids can do. Is there a case for subsidies and tax breaks that the next budget will offer to make sure cashless deals are not just convenient but more lucrative for clean deals?

The author is a senior journalist. He tweets as @madversity