We visited the beautiful and divine town of Thiruvannamalai and the beautiful Arunachaleswar temple. Later we did the Girivalam (going round the mountain using the path around – approx. 14 km). Typically, one encounters many sadhus and others on the way, and it is a practice to give them something – cash usually. Even though we were prepared and had collected the small notes before our departure from Bangalore, we were running out of these small notes (denominations of Rs 10, 20, and 50).
This is a different world and a real one, not the digital world.
We had a similar experience during our recent visit to Haridwar and Rishikesh – the need for cash for small things, purchases, tips, and also alms.
There is a large section of people in India for whom there is friction in small money availability and becomes an issue for them. This is not to take away from the success of digital payments in India, driven by UPI. The success of UPI and digital payments in India is well known and remarkable.
Key points that stand out
- Successful adoption (see growth in volumes and value)
- Ease (smart phones, many providers, new methods for using UPI 123Pay)
- Link to bank accounts (Jan Dhan ensuring the setup of new bank accounts)
- Zero cost – so one can use it to pay Rs 10 or Rs 50,000, at no cost
This note is not about digital payments. It is about the small cash (paper and coin) payments and make it more available.
As seen in many of our travels, I note that small cash availability and usage will have a positive impact on a large number of people, and is also more convenient. This is usually needed for buying small items, tips, donating alms, etc. Digital is not a viable substitute in this situation.
The ease with which one can pull out a 10, 20, and 50 rupee note is unmatched. Coins (5,10 Rs) have lost their relevance though.
I wonder if the RBI and Ministry of Finance have done any estimation of those who don’t use a smartphone (even if they have a bank account)?
From my observation, many also don’t use UPI, including urban folks because of security and fraud concerns (irrespective of the protections UPI offers).
What I see missing in the flow is the volume of small money and availability (Rs 10, 20, 50). These are not so easy to get in a good number and one has to plan for this (like we did when we visited Thiruvannamalai).
This is not to suggest anything to be done on the digital front, but that we need to have enough small note cash circulation so that it makes it easier for those who don’t use UPI or those not digitally savvy (smartphone, UPI, and bank account linking).
There is friction in the small money world and one should look to address this.
Notes on Financial Markets 
Valid and practical suggestions. No new rs 10 paper notes are being printed and rs 10/- coins are not being accepted by local shops in parts of maharashtra, karnataka and Tamil Nadu.
Valid points. While payments through digital mode has vastly grown, we do need some cash, more so in smaller denominations.