How and why to move towards cashless economy after demonetization

आप सभी का बहुत गर्मजोशी से स्वागत!!!!!
jagdeepyadav@yahoo.com
Expectations of a common man from Government
due to Demonetization and Suggestions to Indian
Government to implement eRupee
08-Dec-2016
Disclaimer : Do not try to find mistakes in numbers/figures. Try to understand
the Intent of the video, Content may have some error.
08-Dec-16 JAGDEEP YADAV -- jagdeepyadav@yahoo.com
1/23
ह िंदी अनुवाद
`e
जगदीप यादव

2/23
Government should not give a second chance
to the defaulters.
People are in line with
a hope that something
will change. By
introducing new rules
every day, common
man will lose trust.

3/23
1) Why people are not using Mobile Banking for smaller
amounts and activities like purchasing milk, bread, paying to
rickshawaala, etc?
Cash to GDP ratio is almost 11% in 2016.
We need to develop an App which works like ShareIt and can update the account just by sending one SMS.
Sir, please stop printing high value notes beyond 50 and slowly move towards Digital Currency.
Make sure that all the players such as PayTM, iCash, MobiKwik, PayUmoney, etc talk to each other so that Citizens are
free to use whichever they like, unless we Integrate all these providers, it will be difficult to move towards Digital
Currency.
Today PayTM can send/receive money only to PayTM.
Imagine if we had a situation where we issue a cheque of ICICI and the recipient should also have ICICI bank or else
he cannot use!!! Whole Banking System will collapse!
Users cannot install multiple Apps for Payment and keep loading money. We need to either have one App from
Government or we need to make sure that all these players like PayTM, PayUmoney, iCash, MobiKwik, etc talk to
each other.
Create strong punishment for people not accepting Digital Money!

4/23
2) Model of Future Indian Banking System
In order to move towards Digital Banking and Digital Currency, we should build our Banking System with these features
in mind:
Branch-Less : Only-App- Banking. No need to visit a branch even to open an account.
Signature-Less : Finger-scan should act for Authentication as well as for KYC.
Paper-Less : We need to eliminate even cheque-books over a period of time.
ATM-Less : These banks should not have any ATM. Only Digital currency.
Currency-Less : These banks should not accept or dispense CASH
SignatureLess, PaperLess Banking is required where a citizen can open a Bank Account just by downloading an App and
entering all the Data. Finger Print should act as an authentication methodology which should verify from UID Database.
This authentication of KYC can be done from the Mobile which has Fingerprint scanner, no need to visit any branch.
Citizen should be able to open a bank account without visiting the branch and signing any form. We should not only
focus on paperless, but we need to have branchless banking.
If required, we can have a Banking System with all the above features from UID where they can instantly generate one
new Bank Account number for all the citizens as they already have the Data.

3) What is the biggest challenge/problem for an Indian Economy (अर्मव्यवस्र्ा)?
5/23
1. Big Notes of 500 , 1000 and 2000?
2. Black Money
3. Tax Evasion
4. Fake Currency
5. Corruption
6. Terrorism
7. Politics
8. Current System
What to do? What? Current% Target%
Reduce Cash-2-GDP Ratio 11 2
Reduce Cash Transaction 98 10
Increase Cashless Txn 2 90
Increase IncomeTax-2-GDP Ratio 9 40
Reduce BlackMoney-2-GDP Ratio 65 10
Category
Common
Man
Salaried
Government
LOW CLASS
MP,MLA,IAS,IPS
HIGH CLASS
Corporate
Population 100 Crore 25 Crore 2 Crore 30 Thousand 5 Thousand
% of Population 76 19 1.5 0.002 0.0003
% of Economy(GDP) 3 2 5 45 45

6/23
4) Will Corruption , BlackMoney & Tax evasion stop by this Demonetization?
METHOD Demonetization (LOSS = High, Medium, Low, Nil) or (BENEFIT = High, Medium, Low, Nil)
MOTIVE / Citizen Common Man Salaried
Government
LOW CLASS
MP,MLA,IAS,IPS
HIGH CLASS
Corporate Illegal NATION
Corruption NA NA MEDIUM NIL NIL NIL HIGH
Tax Evasion NIL NA NA NA NIL NIL HIGH
Black Money HIGH NA HIGH NIL NIL HIGH HIGH
Terrorism NA NA NA NA NA HIGH HIGH
Hawala MEDIUM NA LOW NIL NIL HIGH HIGH
Faced Problem HIGH MEDIUM LOW NIL NIL HIGH MEDIUM

7/23
5) Will Corruption , BlackMoney & Tax evasion stop by implementing/Increasing
Cashless Economy?
METHOD CashLess Economy (LOSS = High, Medium, Low, Nil) or (BENEFIT = High, Medium, Low, Nil)
MOTIVE / Citizen Common Man Salaried
Government
LOW CLASS
MP,MLA,IAS,IPS
HIGH CLASS
Corporate Illegal NATION
Corruption HIGH HIGH MEDIUM LOW LOW MEDIUM HIGH
Tax Evasion HIGH NA NA NA NIL LOW HIGH
Black Money HIGH HIGH MEDIUM LOW NIL LOW HIGH
Terrorism NA HIGH NA NA NA MEDIUM HIGH
Hawala HIGH NA MEDIUM LOW NIL HIGH HIGH
IncomeTax
Organised
(NEFT / CHEQUE)
UnOrganised
CASH
CITIZEN A B D
TDS YES NA Yes (HAFTA)
Form 16 YES YES NO
ITR 70% 20% NO
% of Population (1.3 Billion) 1.05% 1.24% 35%
% of Working Population (487 Million) 2.7% 3.3% 94%

8/23
A) Private Outsourced Government!!
C) Right to Recall Voting System
B) Right to Complain – Using QR Code
6) Few suggestions to Government!!

Indian Economy (भारतीय अर्मव्यवस्र्ा )
9/23
Card transactions at POS account for
about 5% of retail sales in India.
Costs for printing banknotes is 2,800
crore annually.
Every additional 1% increase in the use
of cards in retail sales = 28 crore .
Retail Transaction = 98% Cash
Retail Transaction = 2% Cashless
Category Lakh INR % of GDP
GDP 160 100
Tax Collected 14.4 9
Black Economy 104 65
Gold 1.89 1.18
Forex 24 15
Fake Notes 0.000304 0.00019
Mapping
In Lakh Crore 1 2 3 4 5 6 7 8 9 10 11
In Percentage 16.6 160 92 4508 800 1 85 85
1 Cash in Circulation 16.6 10.38
2 GDP 160
3 Cash-Less Txn 92 2
4 Cash Txn 4508 98
5 Banking Txn 800
6 Card Txn 1
7 Retail Txn
8 NPCI-Retail 85
9 Cheque Txn 85
10 Mobile
11 PC/Laptop

Comparison chart
10/23
CashLess %
1-Singapore 61%
2-Netherlands 60%
3-France 59%
4-Sweden 59%
5-Canada 57%
6-Belgium 56%
7-United Kingdom 52%
8-USA 45%
9-Australia 35%
10-Germany 33%
11-South Korea 29%
12-Spain 16%
13-Brazil 15%
14-Japan 14%
15-China 10%
India 2%
Cash-2-GDP %
Country 2014
India 12.42
China 9.47
Germany 7.91
US 7.46
Australia 4.18
Brazil 4
South
Korea
3.92
UK 3.36

Tax Evasion Country
11/23
Top 10 Countries Losing to Tax Evasion
COUNTRY
GDP
($ MILLIONS)
SIZE OF
SHADOW
ECONOMY (%)
TAX BURDEN
OVERALL (%)
TAX LOST AS
A RESULT OF
SHADOW
ECONOMY
($ MILLIONS)
U.S. 14,582,400 8.6% 26.9% 337,349
Brazil 2,087,890 39% 34.4% 280,111
Italy 2,051,412 27% 43.1% 238,723
Russia 1,479,819 43.8% 34.1% 221,023
Germany 3,309,669 16% 40.6% 214,996
France 2,650,002 15% 44.6% 171,264
Japan 5,497,813 11% 28.3% 171,147
China 5,878,629 12.7% 18% 134,385
U.K. 2,246,079 12.5% 38.9% 109,216
Spain 1,407,405 22.5% 33.9% 107,350
Most of these countries has Cashless Economy
Comparison chart

Financial Secrecy Score (FSI -2015)
12/23
RANK Jurisdiction FSI Value Score Global Scale Weight
1 Switzerland 1,466.1 73 5.625
2 Hong Kong 1,259.4 72 3.842
3 USA 1,254.8 60 19.603
4 Singapore 1,147.1 69 4.280
5 Cayman Islands 1,013.2 65 4.857
6 Luxembourg 817.0 55 11.630
7 Lebanon 760.2 79 0.377
8 Germany 701.9 56 6.026
9 Bahrain 471.4 74 0.164
10 UAE 440.8 77 0.085
11 Macao 420.2 70 0.188
12 Japan 418.4 58 1.062
13 Panama 415.7 72 0.132
14 Marshall Islands 405.6 79 0.053
15 UK 380.2 41 17.394
16 Jersey 354.0 65 0.216
17 Guernsey 339.4 64 0.231
45 India 148.0 39 1.487
Comparison chart

Rank Country 2015 2014 2013 2012
1 Denmark 91 92 91 90
2 Finland 90 89 89 90
3 Sweden 89 87 89 88
4 New Zealand 88 91 91 90
5 Netherlands 87 83 83 84
5 Norway 87 86 86 85
7 Switzerland 86 86 85 86
8 Singapore 85 84 86 87
9 Canada 83 81 81 84
10 Germany 81 79 78 79
10 Luxembourg 81 82 80 80
10 UK 81 78 76 74
Score of Top 10 clean country in
terms of corruption as per TI.
https://www.transparency.org/cpi2015/#result_table
13/23
Comparison chart

Estimated Size of Shadow Economy.
14/23
Comparison chart

Indian Administration
(भारतीय प्रशासन)
15/23
CAPF Strength
AR 65614
BSF 248326
CISF 127008
CRPF 308862
ITBP 81823
SSB 77972
Total (9 Lakhs) 9,09,605
Armed Forces Active Reserve Total
Indian Army 1252000 991000 2243000
Indian Navy 79000 55000 134000
Indian Air Force 151000 140000 291000
14,82,000 11,86,000 26,68,000
Others
Railway Protection Force 75000
National Disaster Response Force 13000
SFs (NSG & SPG ) 10000
Other Forces (Not Defined) 25000
1,23,000
Paramilitary Forces Strength
Indian Coast Guard 11000
Special Frontier Force 10000
21,000
MP Lok sabha (543 + 2) 545
MP Rajya Sabha (233 + 12) 245
MLA 4120
MLC 418
Total 5,328
UPSC Strength
IFS 1750
IFoS 2591
IAS 4926
IPS 4754
IRS 10133
IES 763
Total 24,917
PM 1
CABINET 26
MoS (IC) 13
MoS 36
Total 76
Chief Minister 31
Administrator / Lt. Governor 5
Cabinet Ministers of Each State FINDING
State Ministers of Each State FINDING
Total 36
State Gov. Emp. > 1 Crore
Ministry Strength
Railways 1,328,199
Home Affairs 801,092
Defense (Civilian) 375,309
Others 262,261
Communications & IT 216,490
Finance 103,927
30 Lakhs 3,087,278

Actual Number of Paper Currency and
Coins from RBI website till Mar-2016
16/23
GDP of 2016 as per IMF is 2251 BnUSD.
Physical currency in circulation as of 2016 is
16.63 Lakh Crore INR. Cash-2-GDP Ratio is 11%.
Notes
Value
Count (Million Pieces) Value (Billion INR)
Mar-14 Mar-15 Mar-16 Mar-14 Mar-15 Mar-16
2 and 5 11698 11672 11626 46 46 45
10 26648 30304 32015 266 303 320
20 4285 4350 4924 86 87 98
50 3448 3487 3890 172 174 194
100 14765 15026 15778 1476 1503 1578
500 11405 13128 15707 5702 6564 7854
1000 5081 5612 6326 5081 5612 6326
77330 83579 90266 12829 14289 16415
Notes
Percent
% Count % Value
500 14.70 15.70 17.40 44.40 46.00 47.80
1000 6.60 6.70 7.00 39.60 39.30 38.60
Total 21.30 22.40 24.40 84.00 85.30 86.40
Notes
Value
500 11405 13128 15707 5702 6564 7854
1000 5081 5612 6326 5081 5612 6326
Total 16486 18740 22033 10783 12176 14180
Total
Paper 77330 83579 90266 12829 14289 16415
Coin 91629 98964 107088 173 194 218
Total 13002 14483 16633
Total Value in LAKH CRORE INR 13.00158 14.48299 16.63343
Fake Notes Volume Total Value
2/5 2 10
10 134 1340
20 96 1920
50 6,453 322650
100 221,447 22144700
500 261,695 130847500
1000 143,099 143099000
Total(in CR) 29.641712
30 Cr.
Fake
Notes

Calculation of BlackMoney, Tax and GDP
GDP 2015 USD Trillion 2.371
Lakh Crore INR INR Billion USD Remarks
1 1,000,000,000,000 15 330 Ton Gold at 30K Tolla
160 160,000,000,000,000 2,371 Black + White Money
80 80,000,000,000,000 1,186 Black Cash Money in Market
80 80,000,000,000,000 1,186 White Money in Market
14.8 14,800,000,000,000 219 Tax Paid to Indian Government
65.2 65,200,000,000,000 966 White Cash with Citizens
Now, if we have invest 130 Lakh Crore of BlackMoney in real estate,
then with the ration of 60% Black and 40% White, we end up investing
50 Lakh Crore of the White Money, whereas the transaction has
actually happened for 130 Lakh Crore and the beauty is we again have
80 Lakh Crore has come back in Blackmarket.
17/23
Paper currency in circulation as of 2016 is 11% of our GDP of 2016.

18/23
GOLD AND FOREX DATA OF INDIAAS OF 2016
Country Gold (in ton)
Foreign Exchange Reserve
(Billion USD)
GDP in Trillion USD
USA 8,133 121 18.5
India
557 (1.89 Lakh Crore)
(28 Billion USD)
363 ( 24 Lakh Crore INR) 2.3
The total Gold till date that world has mined is
Total Mined
(In Ton)
Total Value of Gold in
Trillion USD till Date
171,300 8.26
One Troy Ounce = 31.035 Gm = 1500 USD
1 Kilo Gold = 32.15 Troy Ounce = 48,226 USD
1 Ton = 32150 Troy Ounce = 48.23 Million USD
1 Tolla = 10 Gm = 34000 INR
1 Kilo Gold = 3,40,00000 (3 Crore 40 Lakhs)
1 Ton Gold = 340 Crore INR

19/23
Year
1 USD
to INR Year
1 USD
to INR Year
1 USD
to INR Year
1 USD
to INR Year
1 USD
to INR
1946 1 1981 8.68 1991 22.72 2001 47.23 2011 46.61
1947 1 1982 9.48 1992 28.14 2002 48.62 2012 53.34
1952 4.75 1983 10.11 1993 31.26 2003 46.6 2013 58.53
1966 7.1 1984 11.36 1994 31.39 2004 45.28 2014 61.02
1973 7.66 1985 12.34 1995 32.43 2005 44.01 2015 66.66
1974 8.03 1986 12.6 1996 35.52 2006 45.17 2016 68.67
1975 8.41 1987 12.95 1997 36.36 2007 41.2 2017 72.05
1976 8.97 1988 13.91 1998 41.33 2008 43.41 2018 75.47
1977 8.77 1989 16.21 1999 43.12 2009 48.32 2019
1978 8.2 1990 17.5 2000 45 2010 45.65 2020
1979 8.16
1980 7.89
YEAR 1973 1978 1985 1990 1995 2000 2005 2010 2015 2016
INR/KG 17 K 50 K 1.24 L 2 L 4 L 4 L 6 L 20 L 22 L 30 L
INR/Tolla 170 500 1240 2000 4000 4000 6000 20000 22000 30000
DOLLAR and GOLD RATE
This 2016 Demonetization in India is not
the first time and India is not the first
country in the world to do Demonetization
of high value notes. Many countries
including India have done these in the past
such as :
DEMONETIZATION HISTORY
Ghana – 1982
Nigeria – 1984
Myanmar - 1987
North Korea – 2010
India – 1946
Hyderabadi Rupee - 1959
USA – 1969 - Beyond 100
India – 1978
In 1873, due to shortage of Silver, world moved towards Gold Standard.
UK pegged 1 Pound to 15 INR in 1898. 1 Pound was equal to 4.70 USD.
1 USD = 3.20 INR in 1898.

20/23
INCOME TAX
Financial Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Corporate Tax (in Cr.) 35696 36609 46172 63562 82680 101277 144318 193561 213395 244725 298688 322816 356326 394678 428925 454419
Personal Income Tax (in Cr.) 31764 32004 36866 41386 49268 63689 85623 120429 120034 132833 146258 170181 201840 242888 265772 286801
Other Direct (in Cr.) 845 585 50 140 823 250 240 340 389 505 1049 990 823 1030 1095 1075
Total (in Cr.) 68305 69198 83088 105088 132771 165216 230181 314330 333818 378063 445995 493987 558989 638596 695792 742295
Financial Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Direct Taxes (in Cr.) 68305 69198 83088 105088 132771 165216 230181 314330 333818 378063 445995 493987 558989 638596 695792 742295
Indirect Taxes (in Cr.) 119814 117318 132608 148608 170936 199348 241538 279031 269433 243939 343716 390953 472915 495347 543215 711885
Total Taxes (in Cr.) 188119 186516 215696 253696 303707 364564 471719 593361 603251 622002 789711 884940 1031904 1133943 1239007 1454180
Direct Tax As % Of Total Taxes 36.31% 37.10% 38.52 41.42% 43.72% 45.32% 48.80% 52.97% 55.34% 60.78% 56.48% 55.82% 54.17% 56.32% 56.16% 51.05%
Financial Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Total Collections (in Cr.) 68305 69198 83088 105088 132771 165216 230181 314330 333818 378063 445995 493987 558989 638596 695792 742295
Total Expenditure (in Cr.) 929 933 984 1050 1138 1194 1349 1687 2248 2726 2698 2976 3283 3641 4101 4593
Cost of Collection (in Cr.) 1.36% 1.35% 1.18% 1.00% 0.86% 0.72% 0.59% 0.54% 0.67% 0.72% 0.60% 0.60% 0.59% 0.57% 0.59% 0.62%
PAN Category AY 2011-12 AY 2012-13 AY 2013-14 AY 2014-15
Association of Person (AOP) 110230 124010 138098 142192
Body of Individuals (BOI) 5392 5688 6052 6221
Company 596377 654766 702621 714419
Firm 950147 995648 1038309 1031457
Government 62 94 159 294
Hindu Undivided Family (HUF) 892205 931387 956233 907047
Artificial Juridical Person 9896 9897 10039 9649
Local Authority 5056 5459 5935 6807
Individual 40883558 44346852 49033288 48663680
Trust 184563 193781 202590 192056
Total 43637486 47267582 52093324 51673822

Global Financial Integrity (GFI) http://www.gfintegrity.org/
Transparency International (TI) http://www.transparency.org/
Financial Transparency Coalition (FTC) https://financialtransparency.org/
World Bank http://data.worldbank.org/
International Monetary Fund (IMF) http://www.imf.org/external/index.htm
International Consortium of Investigative Journalist (ICIJ) https://www.icij.org/
United Nations https://www.un.int/
World Health Organization (WHO) http://www.who.int/en/
United Nations Educational, Scientific and Cultural Organization (UNESCO) http://en.unesco.org/
United Nations International Children's Emergency Fund (UNICEF) https://www.unicef.org/
International Court of Justice (ICJ) http://www.icj-cij.org
North Atlantic Treaty Organization (NATO) http://nato.int/
International Criminal Court (ICC) https://www.icc-cpi.int/
International Labour Organization (ILO) http://www.ilo.int/
INTERPOL https://www.interpol.int/
International Organization for Migration (IOM) http://www.iom.int/
World Intellectual Property Organization (WIPO) http://www.wipo.int/
World Trade Organization (WTO) http://www.wto.int/
Statistics Times http://statisticstimes.com
Financial Action Task Force (FATF) http://www.fatf-gafi.org/
LINKS From where I have collected DATA for this presentation
21/23

LINKS From where I have collected DATA for this presentation
22/23
https://dbie.rbi.org.in/DBIE/dbie.rbi?site=home
http://indianbanknote.blogspot.in/2012/01/collection-of-facts-about-indian-paper.html
http://worldcurrencyandcoins.blogspot.in/2011/01/old-indian-currency-ten-rupees-notes.html
http://www.indiatimes.com/culture/who-we-are/a-brief-history-of-india-in-15-currency-notes-230592.html
https://knoema.com/infographics/rygejhb/rupee-devaluation-against-dollar-1947-till-date
http://www.indiatimes.com/news/world/here-s-a-list-of-countries-that-have-tried-demonetisation-before-india-265743.html
http://worldcurrencyandcoins.blogspot.in/2011/01/old-indian-currency-1000-rupees-notes.html
http://coinsofrepublicindia.blogspot.in/2012/04/five-hundred-rupee-note-part-one.html
http://dget.nic.in/upload/uploadfiles/files/publication/CENSUS_REPORT_2011_.pdf
http://santhiprinting.blogspot.in/2013/05/origin-and-growth-of-bank-notes-and_2.htm
https://in.pinterest.com/pin/23995810484836909/
https://letstalkpayments.com/a-list-of-mobile-only-banks/
http://www.mintageworld.com/blog/origins-indian-paper-money/
http://www.coindesk.com/price/
http://numismondo.net/pm/ind/indexr1.htm
http://www.forecast-chart.com/currency-indian-rupee.html
http://indiabudget.nic.in/budget2015-2016/afs.asp
http://www.xe.com/currencytables/?from=INR&date=1995-11-16
https://data.gov.in
http://www.mospi.gov.in/
http://www.financialsecrecyindex.com/
http://www.taxjustice.net/

THANK YOU
&
JAI HIND
23/23

How and why to move towards cashless economy after demonetization

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