Cashless India: A new digital divide?

Volume 3        Issue 2        February 2018

On November 8, 2016, Indian Prime Minister Narendra Modi addressed the nation in a televised announcement, stating that “the 500 rupee and 1000 rupee currency notes presently in use will no longer be legal tender from midnight tonight”. The move, quickly popularised as “demonetisation” and affecting around 86% of the currency in circulation, was justified by the goal to “break the grip of corruption and black money” in the cash-intensive Indian economy.

Just over a year after demonetisation, its effectiveness for the stated corruption-reducing purposes is widely debated. A related debate, directly relevant for ICT4D, is on the Government’s statement that the poor and unbanked, who conduct most of their transactions in cash, would be able to cope with demonetisation through ICT adoption. In this view, quick diffusion of mobiles and rise of ICT education among the poor would enable a smooth transition to a cashless economy. Has the “demonetisation through digitalisation” proposition proven true?

Pro-poor ICT infrastructure was developed before demonetisation. It consists of the Pradhan Mantri Jan Dhan Yojana, a program providing zero-balance bank accounts to low-income households; the Unique Identity Project (Aadhaar) conferring residents a unique identification number and biometric credentials; and mobile phones being linked to national anti-poverty schemes. The combination of Jan Dhan, Aadhaar and mobiles, known as “JAM trinity”, acts as the Government’s main enabler of an ICT-based agenda for financial inclusion.

With the sudden need to deposit the old notes into bank accounts, relevance of Jan Dhan has increased, and Aadhaar has become an enabler of digital transactions. With the uptake of digital wallets, informal sellers were enabled to continue business through mobiles. This suggests that each element of the JAM trinity has acquired a new meaning post-demonetisation, enabling financial inclusion of the poor.

Yet, fieldwork conducted in the aftermath of demonetisation raises issues with this argument. As observation in street markets revealed, transacting in a cashless economy requires technologies that support digital systems, in a country where smarthpone penetration is estimated at just 17%. This raises problems regarding the integration of rural, tribal, and urban poor communities  in a system predicated on access to advanced forms of ICT.

 

My fieldwork has also revealed asymmetric distribution of information on how to navigate the new digital economy. Sudden cashlessness forced

 

poorer people to interface with banks and credit institutions, exposing them to confusing and often contradictory information on what to do. While volunteers have helped the poor adopt ICTs, an institutionalised system of support has been lacking, weakening the ability of vulnerable groups to interact with credit institutes and cope with the new system.

In a nation where an estimated 24% of the population lives without electricity, infrastructural problems make the picture more complex. India ranks 134 out of 176 countries in the ICT development index calculated by ITU, with only a minimum variation over time. Internally, inequality of ICT access puts isolated areas at risk when envisaging a digital transaction system, rooted on well-functioning ICTs. Fragilities in the accountability of payment systems have emerged even in well-connected urban areas.

As a cashless economy ensues in India, the real danger is that of widening the extant divide between those who own digital means of transaction, and those who are structurally unable to access them. While the former experience limited constraints in a digital economy, the latter risk to remain locked outside the network and experience economic isolation. As I have argued elsewhere, this may lead to determining a type of economic exclusion that did not exist before, inducting the quasi-coactive adoption of digital tools for the traceability of transactions.

Demonetisation was originally presented as a fix to an economy framed as cash-intensive and therefore ridden with corruption. As the move towards a cashless economy takes shape, guaranteeing access to the system and preventing the lock-out of vulnerable communities is paramount. ICT4D research and practice need cautioning against an emerging new form of digital divide, framed in terms of access to digital means of transaction. Bridging this new divide is of crucial importance to enable marginalised communities to sustain their livelihoods in the new cashless system.

Christmas Greetings 2017 from the UNESCO Chair in ICT4D

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Members and Affiliated Members of the UNESCO Chair in ICT4D would like to take this opportunity to share these images from a nativity scene in Macau earlier this month and wish all of their friends and colleagues a happy, peaceful and relaxed Christmas.  According to the Gospels,  Christ was born in a stable (homeless), to an unmarried mother, and then became a refugee as his parents fled from Palestine to Egypt.  For those of us working in the field of ICT4D, it is a timely reminder of our commitment to using ICTs to serve the interests of the poorest and most marginalised, wherever they are to be found, and especially children, the homeless, minorities, and refugees.

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ICT4D: mainstreaming the marginalised in Pakistan

Workshop 2It was great to be back in Islamabad to participate in the second two-day workshop organised by the Inter-Islamic Network on Information Technology and COMSATS Institute of Information Technology with the assistance of the UNESCO Chair in ICT4D, and held on 5th and 6th October.  It was fascinating to see the progress that has been made in Pakistan since the first such workshop that we convened in January 2016,  particularly in terms of policy making, awareness, and entrepreneurial activity.  It was also very good to see such a diverse group of participants, including academics, entrepreneurs, civil society activities, government officials, and representatives of bilateral donors engaging in lively discussions throughout both days about how best we can turn rhetoric into reality.

Following the official opening ceremony, there were seven main sessions spread over two days:

  • shahUnderstanding the ICT4D landscape, in which the main speaker was Dr. Ismail Shah, the Chairman of the Pakistan Telecommunication Authority
  • The road to facilitation: financial technologies for the marginalised, with a plenary given by Qasif Shahid (FINJA) about making payments frictionless, free and real time.
  • Addressing the digital gender gap, at which the UNESCO Chair in ICT4D spoke about why this is a pressing concern, and it gave a chance for him to tdiscusst the new UN-led EQUALS initiative for gender equality in a digital age, as well as some of the challenges that face women in using ICTs (slide deck).
  • No tech to low tech to high tech: an entrepreneur’s tale, with a plenary by Muhammad Nasrulla (CEO INTEGRY).
  • disability panelServing the most marginalised: accessibility and disability, with a plenary by David Banes on access and inclusion using ICTs, which included a very useful framework for considering digital accessibility issues.
  • Developing technologies for the rural/urban slum needs, during which Muhammad Mustafa spoke about his vision of enabling all 700 million illiterate adults in the world to go online through his Mauqa Online initiative.
  • Educating the marginalised, where the UNESCO Chair in ICT4D spoke about educating marginalised children (slide deck) and Shaista Kazmi from Vision 21 described their Speed Literacy Program.

Each session combined enthusiastic discussion around the themes addressed by the plenary speakers, and it was excellent to learn from all those involved  about using ICTs in very practical ways to deliver on the needs of poor and marginalised people and communities in Pakistan.

Atiq and AlberFull details of the event can be found on the INIT site, where copies of the slide decks from each main presentation will also be available.  Very many thanks go to all of the organisers, especially Tahir Naeem, Akber Gardezi and Muhammad Atiq from COMSATS IIT and INIT for all of the hard work that they put into making the event a success.  We look forward to convening the next such workshop in about a year’s time, once again bringing together people from all backgrounds intent on using ICTs to support Pakistan’s most marginalised communities.