A Mobile Payments Subsidy Being Considered in India
The old saying goes that you get more of what you specifically subsidize. Basically, people chase cash like a mechanical rabbit at a dog track, so whether you’re offering a bounty for dead snakes or a price on a criminal’s head, you’ll get people pursuing the payday. The Indian government is said to be readying a subsidy package to convince consumers to make the jump to mobile payments, but there are more than a few who think this may be a bad idea.
By offering the subsidy—the details are sparse but it’s said to be aimed directly at the consumer to encourage “small ticket spending”, mostly transactions under 2,000 rupees or roughly $31.30 as of this writing—the Indian government apparently hopes to accomplish by encouragement what it couldn’t do by declaring most of the cash in the country worthless: get those last few holdouts out of cash and onto mobile payment systems, of which there are several available in the country.
This may be the biggest reason many have for finding a subsidy a bad idea; it’s mostly unnecessary. Indians are already flocking to mobile payments systems, particularly after the demonetization effort of last year, so why offer cash that could go toward things like public health projects or the like to get more people to use a program that more people are already using?
Admittedly, a subsidy would almost certainly get more people interested. It would also get those who already use mobile payments interested, unless the program was specifically geared toward first-time users. That would be a great way to alienate a large portion of the country who’s left to ask, “Dude, where’s my subsidy?”, and it likely wouldn’t pull in that many more users.
However, if the subsidy is expanded, it would offer disposable income to those likely to spend it, and could have a positive effect on the broader economy. People with more money tend to spend it, or at least save or invest it.
Still, overall, the naysayers may be right here. India has a lot on its plate right now, and offering subsidies to artificially force along a movement that was already moving along doesn’t seem like the best use of cash.