Effects of globalization on Indian society, Social empowerment
General Studies 2
Indian Constitution? historical underpinnings, evolution, features, amendments, significant provisions and basic structure.
General Studies 4
Free speech and Campus violence
Universities should be platforms of debates and discussions where young minds engage in constructive nation building. It is disturbing to see the recent cases in campuses across the country and ideological divisions leading to violence.
The president has recently addressed his underlining of free speech and what a university should be couldn’t have been more relevant.
In a public function in Kochi, President Pranab Mukherjee has said that “there should be no room in India for the intolerant Indian”.
It amounts to an eviction notice for the trolls who have dominated the political discourse both online and offline.
In addition, the president has specifically pointed to the university as a disputed site in the battle between competing ideas of India, and to the need to preserve its freedoms.
And he has stood up for women, arguing that brutalising a woman wounds the soul of Indian civilisation.
In the wake of a shameful attack on a woman student in which a Union minister allowed himself to be embroiled, this amounts to a direct indictment of the government.
Intolerance and threat to free speech:
In October 2015, Prime Minister broke his silence on the Dadri lynching to respond to President’s insistence that diversity, tolerance and plurality are core values binding the country together.
Calling him the “pramukh mukhia” of India, Modi had embraced his line and urged the people to follow suit.
Rhetorically, he had asked people not to deviate from it even if Narendra Modi told them to.
Later, at a function in December, the prime minister had expressed his gratitude for Mukherjee’s guidance in the early days of his government.
He had kept Rashtrapati Bhavan updated through the period of turmoil following demonetisation and in his New Year’s address, the president had sensibly pointed out that the people needed immediate succour, and that the year-end relaxations provided a flimsy shield.
Need for Tolerance and freedom of expression:
Now, while decrying the meanness and ugliness which has cast a shadow over politics as the states go to the polls, President Mukherjee has said that leaders must listen to the people, engage with them, learn from them and respond to their needs and concerns.
It is valuable advice for a government which hopes to change the way India lives and thinks. It cannot achieve positive change by unilateral action, and dissent can be demonised only at the expense of democracy.
In particular, it must be appreciated that students go to university to learn how to think, not what to think.
They must have the freedom to explore knowledge without the fear of being penalised for thoughtcrime, or eventually, the knowledge economy which this government values so much will collapse.
Listening to the people and governing according to their needs rather than political imperatives is an ambitious project. But the government could make a small but significant beginning by listening to, engaging with, learning from and respond to the needs and concerns of the president.
For a country to emerge dynamically and for a deliberative democracy it is important that free speech and expression is seminal. In India in the past few years repeated incidents have tarnished the record of tolerance and hence raised questions and concerns in international platforms. In this light it is important to listen to the first citizen of the country in true spirit.
Connecting the dots:
Critically analyse the importance of free speech and expression for emerging democratic countries especially in light of recent incidents.
General Studies 3
Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
General Studies 2
Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Post Demonetisation: Conditions for a less cash economy
There was a surge seen in digital transactions during the demonetisation period. But now, this trend is showing a reversal in February with accelerated pace of decline in electronic transactions.
There was a month-on-month decline of 21.3% in the volume of electronic transactions, higher than the 9.1% seen in January 2017 over December 2016.
In December 2016, transactions through electronic payment methods had peaked and the volumes jumped to 957 million (684 million in February).
This decline is seen as reflective of the improved cash availability situation over the last couple of months.
The drop goes against government’s stated objective of scrapping high-value currencies — that of moving towards a “less cash” economy.
The affected areas
The biggest fall was seen in cheque payments, use of debit and credit cards at point of sale terminals and mobile banking.
These options had emerged as the preferred modes of payment following the lack of availability of cash during the demonetisation period.
This shows that demonetisation was a great opportunity to drive the digital transaction ecosystem. However, people seem to go back to their old habits as and when the cash supply eases.
One of the reason is- both cash and digital payments have convenience. But cash comes free whereas digital payment comes with a cost. This needs to be dealt with else cash will become more convenient by default and people will go back to using it when supply in the economy is normalised.
Thus, some policy incentives are needed to make digital payments a habit.
At present, there are various charges on digital transactions. Irrespective of who (purchaser or seller) pays, it will have an impact on the cost of goods/services. (there is 2% extra for using card.)
This charge is known as merchant discount rate (MDR). Here, the institution issuing credit cards (the issuer), the sponsoring bank of the point-of-service (PoS) device with the merchant (the acquirer) and the settlement provider (typically VISA, Mastercard, RuPay) all charge for a transaction.
The MDR, charged from the merchant, is divided among these three parties. This method is applicable in the credit and debit cards.
As the PoS device is supplied by the acquirer, there can be some justification for the charge, although this charge should be minimal.
However, this concept is continuing for mobile transactions as well even if there are no cards or PoS. ideally, there shouldn’t be any charge as in the mobile app world, PoS machines are the users’ smartphones. So when they make any transaction, they are using their own bandwidth.
The reason for charges being market driven is to keep the incentives up for concerned stakeholders, especially acquirers to set up acquisition infrastructure, which has resulted in status quo.
The point of incentivising the stakeholder is valid but the charges should also be reasonable to sustain the existence of the system. With no regulatory intervention, the charges have been levied as per one’s own convenience.
What can be done?
MDR removed from mobile payments
A fair charge should be paid to back-end — the bank of the purchaser, the bank of the seller/merchant and the settlement body (NPCI).
For example, in telecom sector, there is a ‘work done’ principle which can be applied to online payments too. Suppose, a customer of operator A makes a call to a customer of operator B. Here, operator A charges his customer for the call, operator B is paid by A in lieu of handling that call to its customer.
The rate per-minute is computed based on work done by B’s network and are decided by the regulator.
Applying the same principle in online transactions, the users should not be categorised as merchants or non-merchants. Instead should be treated as peer-to-peer transactions with no charges.
For example, A transfers money to B (who can be anybody including a merchant) using BHIM.
The information travels from Bank of -> checks balance-> does authentication (PIN no. etc) -> verified and goes to NPCI (interbank switch) -> NPCI sends the message to B’s bank -> B’s Bank credits money to B’s account.
The three entities here are- A’s bank, NPCI and B’s Bank- which are completely digital and if one computes the work done, it is almost zero.
It is A and B who are paying the data charges for this transaction and thus there is no network charge payable by any back-end entity.
Thus, it is bank’s duty to enable the customer conduct basic banking operations when the mobile transactions are making the lives of banks much easier.
There is some rationale in charging MDR (though at much lower rates) for cards because of the PoS machines and card issuance and maintenance. But there is no justification for any MDR charge for mobile banking. Even the authentication of the identity is done by Aadhar, which is also free of charge.
Thus instead of looking at MDR as a source of income, larger gains such as more liquidity/float and less cash handling costs (on ATMs and counters) should be viewed.
These are levied by various entities, both private and public, for online transactions. It is one of the revenue streams for most of the websites.
For instance, if you book a movie ticket, a flight ticket, pay an electricity bill or school fee online, a convenience fee is levied. Till recently, even IRCTC used to pay a convenience fee of Rs. 20 per ticket (Scrapped in budget now).
The justification for this charge is that the customer is getting an alternative payment option, which is a ‘privilege’.
It is also used to cover the payment processing charges and what gateways must pay banks for online transactions.
However, the question here is who is providing convenience to whom? If the customer is paying airfare or booking movie ticket online, he is paying for the data charges and printing own ticket. Had he been on the physical counter, it would consume time of the counter-clerk, printing cost of ticket et al.
Here the digital transaction is reducing the cost of service providers and thus they should provide a discount on online transactions.
The other essentials for ensuring sustainable transactions are the convenience and confidence of common man.
This would entail user-friendly (and idiot-proof) applications which are safe and secure from cyber attacks.
For this, a security and interface certification of such applications is required sooner to prevent any fraud from happening. Else, it would be a major setback for digital transaction.
If a person can save a rupee by spending cash, the person shall go for cash payment than digital payment. This shows the cash-sensitive nature of Indian market. The cost of the digital transactions have to be made competitive with cash to push its usability chances. Additionally, if there is any incentive compared to cash transactions, the digital medium will get a boost.
Digital financial transactions and a less-cash India is critical to the growth of the country. It will give more liquidity, better tax-compliance and GDP growth. It will also create a virtuous cycle of creating credit histories, availability of credit to poor at reasonable interest rates and digital credit dispensation, leading to deeper financial inclusion.
Connecting the dots:
Digital payments require continuous boost and push else the whole idea of ‘a less cash’ economy will fail. Identify the problems pertaining to usability of digital platform and suitable solutions.
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