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Day 12 – Q 2.What is the significance of digital literacy in a cashless economy? How does it help in financial inclusion? Explain with the help of suitable examples.

2. What is the significance of digital literacy in a cashless economy? How does it help in financial inclusion? Explain with the help of suitable examples.  

कैशलेस अर्थव्यवस्था में डिजिटल साक्षरता का क्या महत्व है? यह वित्तीय समावेशन में कैसे मदद करता है? उपयुक्त उदाहरणों की सहायता से समझाएँ।


Digital literacy is the ability to navigate various digital platforms and understand, assess and communicate through them. Digital literacy, by this definition, encompasses a wide range of skills, all of which are necessary to succeed in an increasingly digital world. 


Significance of digital literacy in cashless economy:

  • A cashless economy is one in which all the transactions are done using cards or digital means. The circulation of physical currency is minimal.
  • The modes of transaction in cashless economy can be optimally utilised only when people are aware of these technologies. Digital literacy is the key to more effective e-payments and cashless transaction.
  • In addition, it is important to dispel doubts and fears that senior citizens have about digital money and the security of their transaction and equally important to induct the younger generation in digital payment space at an early age.
  • Post demonetisation, both customers and business owners are seriously considering digital payments mode. To tap these, digital literacy needs to be pushed more among the masses.

How does digital literacy help in financial inclusion:

  • Financial inclusion can only happen concurrently with digital literacy, which are twin pillars to mitigate poverty. For ex: 32.4 crore accounts having been opened under the PMJDY but if the account holders do not know how to optimise the financial options open to them, policies, schemes and financial instruments mean little.
  • In the era of smart phones, people are performing banking operation on their smart phones itself, for which digital literacy is a must. For ex: Digital platforms like YONO by SBI, AEPS, UPI, etc., deliver financial services to both the unbanked and the under banked population, especially in rural/remote regions, at a low cost, and subsequently increase digital financial access to the vast swathes of the country’s population.
  • There is gender imbalance in use of digital payments, this is due to insufficient focus on digital literacy. Inclusion of women into formal financial system can bring structural changes to the economy.
  • Often the vulnerable sections like differently abled, transgender, tribals etc. are not part of the formal economy. Digital literacy missions must target these sections on priority.

Some of the government initiatives to promote digital literacy:

  • National Digital Literacy Mission (‘NDLM’) has been initiated with the vision to empower at least one person per household with crucial digital literacy skills by 2020.
  • The Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA) being initiated under Digital India Programme would cover 6 crore households in rural areas to make them digitally literate.
  • Vittiya Sakshartha Abhiyan (VISAKA), the purpose of which is to actively engage the youth/ students of Higher Education Institutions to encourage and motivate all payers and payees to use a digitally enabled cashless economic system for transfer of funds.


As print medium begins to die out, the ability to comprehend information found online becomes more and more important especially in the financial domain. India being a major economy must reap benefits of digital age for which digital literacy is inevitable.

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