Your data or your life. On demonetisation, cashlessness and the digital panopticon in India

Abstract

Over the past few years, there has been a growing debate over cashlessness. In several countries, economists, policy makers and financial institutions have insisted on the advantages of cashlessness, considering digital transactions as an instrument of governance pivotal to the achievement of a more transparent and inclusive society. Over these same years, cash has become a symbol of tax evasion, corruption, and criminal activities such as terrorism, the drug trade and human trafficking. In India, most consumer transactions have traditionally been carried out in cash, both in terms of volumes and in terms of value, from when the Indian Government ordered that cash be removed from circulation on November 8th, 2016. In contrast to countries such as Norway or Sweden, where the cash-to-GDP ratio has been slowly declining, banking penetration has always been low in India, with merely 53% of households having one bank account, the number of ATMs/1000 people being 0.1, financial literacy insufficient even for basic operational procedures and the cash-to-GDP ratio of India being among the highest in the world, as summarised by the Indian multinational banking company ICICI in November 2016. In this context, Indians relied heavily on cash for most transactions. Daily workers used to rely on cash to pay for daily errands and emergencies, including possible illnesses, but even for transactions in real estate (Gettleman, 2018). Women used to fold away their cash in their saris and often relied on cash as a hedge against the future. For them, demonetisation did not represent a step towards greater financial inclusion. More dramatically, it meant the risk that they would not to be able to convert their credit into money beyond a certain date. If money is but a promise to pay, the Government's refusal to honour the legal tender status of Rs 500 and Rs 1000 notes beyond a certain date left citizens with no other option but to line up at the nearest bank, hoping they would be able to exchange their old bills for new ones. In general, the decision to not provide legal backing to 500 and RS 1,000 notes produced a cash crunch in the country. The problem, however, was not