Prime Minister Narendra Modi can take heart from the fact that the biggest reveler in cash, the real estate industry has been humbled

The real estate market which had been characterised by shady cash deals to the extent of around 60 percent in Delhi and Mumbai today wears a humbled look. Buyers are reluctant to pay cash. Home loan companies are not disbursing the loan unless all payments to builders hitherto have been accounted for through banking channels. Sellers are afraid of taking cash lest next round of demonetisation might hobble them. Prime Minister Narendra Modi can take heart from this fact alone---the biggest reveler in cash, the real estate industry has been humbled. In the process, it might have slowed down but that cannot be forever.

Of course, this is not enough. It is a work in progress. Several rounds of demonetisation might be needed till cash loses its lustre to crooks. Yes, it is the crooks who are wistfully looking back to the cash economy. The poor and the middle class are warming to the idea of non-cash payments, be they through mobile wallets, cards or BHIM. Goldsmiths and jewelers, another revelers in cash, are now more circumspect, insisting on PAN from those offering more than Rs 2 lakh in cash.

The third set of revelers in cash, the medical profession and hospitals are wearing a doleful look what with Ayushman Bharat depriving this sector of cash. Traders, hitherto, accepting cash are seeing the merit and comfort in swiping machines that spares them the agony and burden of handling cash. Yes, Modi has done something seminal through demonetisation---instilling in the nation respect for non-cash payments and contempt for cash for large transactions.

Modi should, however, cleanse his own Augean stables---the political parties, the largest in the world of which he is the supremo. He and his government did well to end cash donations to political parties beyond Rs 2000. But this is not enough. He must mandate complete ban on cash donations given the Indian proclivity at taking a foot when an inch is given----the Indian ingenuity lies in splitting and splintering.

A wily donor wanting to give Rs 1 crore in political donation would laugh up his sleeve and ask the political parties to note the largesse in the names of 5,000 fictitious persons. To be sure, this was a lot easier when the limit was Rs 20,000. Nevertheless, Modi will have to go the whole hog because political funding is the gangotri of cash economy of India.

Cash should be gradually sucked out of the economy. When net banking and card payments gain ascendancy, the pernicious role of cash will come down. In step with such reduction in role for cash, ATMs must be dismantled because they beckon cash guzzlers by their sheer existence. Banks must prevail upon their trader-account holders to install swiping machines at their establishments as it is a win-win in the sense that both are spared the agony of handling cash.

When bank accounts become universal, payments must be made through banking channels including to farmers by the procurement agency the Food Corporation of India (FCI). Small-scale industry (SSI) units and micro units must be encouraged to dispense with cash and instead embrace banking transactions. The Income Tax Act rightly encourages small traders with an attractive incentive---just 6 percent deemed profit on turnover up to Rs 2 crore to the extent it is through banking channels.

Demonetisation by itself would not have mainstreamed the economy. The credit for this must go to the Goods and Services Tax (GST) which was ushered almost back-to-back with demonetisation. One doesn’t know if the Modi government planned the two in advance and sequenced them to perfection but the truth is even if the two panned out one after another serendipitously, they have together ended the country’s mental sickness in reveling in cash. That is the crowning glory of demonetisation. Let the naysayers and quibblers say anything. The poor bore the brunt in the early days of demonetisation when they stood in serpentine queues before ATMs. But they have given their thumbs-up to the exercise. And it is their blessings that count.

(The author is a senior columnist and tweets @smurlidharan)