Bengaluru: Former UIDAI chairman and Infosys co-founder Nandan Nilekani said India can never be a manufacturing superpower such as China and its growth will depend on its domestic services industry. He said the latter makes the digital financial inclusion of a large segment of people - especially those outside the orbit of the traditional banking system - imperative, and demonetization will help accelerate the process.
"Demonetisation will help digitisation of the economy and the roll out of digital financial services. What could have taken about six years can now be done in six months," he said.
Nilekani said it was important to make payments to merchants cashless and much of the infrastructure required to effect this change was in place. Of India's 1.3 billion population, 250 million have smartphones to make online payments, while another 350 million have feature phones. Feature phone users can use USSD (unstructured supplementary service data) to send or receive money.
The remaining, who are outside the formal financial system, can use their Aadhaar cards to make payments at micro ATMs, he said. "It is necessary to increase the number of micro ATMs to about 1 million from the current 130,000," he said. Micro ATMs are handheld point-of-sale terminals used to disburse cash in remote locations where bank branches cannot reach.
He, however, called for a combination of innovation and regulation "because if you do not control, there will be a private monopoly, like Alipay or WeChat in China."