Cashless will result in loss of cash

The Prime Minister is thinks that cashless transactions will get rid of black money. That is because payments involving cheques and credit cards leave a trail which can be followed. Is it possible to become totally cashless? While use of cash has become infrequent in the US and UK, on the continent of Europe shops and restaurants still demand cash. In India any work involving labor must be paid in cash. Housemaids, car cleaners, drivers, plumbers, painters, electricians, small shops, all demand cash. Perhaps Mr Modi thinks that if everyone has a bank account, as in under Jan Dhan Yojana, then money could be transferred from one account to another, even via a cell phone. A plumber in Delhi earns between Rs 25-30,000 per month, which makes him liable to pay income tax. Inflation has increased the cost of living so high that a man living in a rented flat, with a wife and 2 children, going to school, can barely manage on Rs 25,000 a month so he will do everything to avoid paying tax. Thus there is a huge parallel economy which survives only on cash transactions and millions will lose out if it came to a halt. But why should individuals be asked to be cashless when the government itself discourages such transactions. If you buy a train ticket online you have to pay a service charge of around Rs 50 and 2% on the cost of the ticket if you pay buy credit card. On petrol you have to pay 2% for payment by credit card unless the company has a tie up with the bank whose card you are using. If you buy Rs 30,000 worth of petrol every year you save Rs 600 by paying cash. Everyone knows that nearly half the value of any property is paid by cash, or black money, but that is only half the story. Massive amounts of black money is generated by the rent industry. As millions of people migrate from villages to cities looking for work landlords have added extra floors to their buildings, mostly without planning permission or proper foundations in buildings, by paying bribes to municipality fellows. Rooms are rented out for Rs 3-5,000 per month, collected in cash. Electricity is charged at Rs 12 per unit. As the cost of real estate has zoomed, due to black money, properties have become out of reach for the vast majority of people, enabling landlords to charge any amount as rent. To compensate labor wages have soared, adding to inflation. Even for those who pay by cheque the Rent Control Act has made it very expensive to rent an apartment. Rent agreements are only for 11 months and you have to vacate the apartment or pay 10% more every 11 months. This adds 10.3% to your cost of living every year, again adding to inflation. Mr Modi has good ideas but he has to undo 67 years of injustice to get a clean society. Best wishes.