Government should subsidise smartphones to kick off digital payments: Sachin Bansal

He wants the prices to be brought down to as low as $50

The government should subsidise low-cost smartphones to bring prices down to as low as $50 (approx Rs 3,350) in order to get more Indians to start transacting digitally and avoid the build of cash and more importantly black money in the country once again, said Flipkart co-founder Sachin Bansal here on Wednesday.

The call to use taxpayers money to subsidise smartphones came during a conversation between Bansal, who is also the chairman of Flipkart, and Vikram Chandra, CEO of NDTV Group, at the Global Mobile Internet Conference held at Bengaluru on Wednesday.

"The one suggestion I would have is if you want to push digital payments the government should probably subsidise low-cost smartphones. If it's a $100 (Rs 6,700) smartphone, the government should think about how do I make this $50," said Bansal.

Digital payments is being pushed as a game changer for India's economy with the government pushing initiatives such as the Unified Payments Interface (UPI). Moreover, with the State Bank of India (SBI) gearing up to open its UPI enabled wallet for its users from December, over 300 million new people will now have access to digital payments.

While India has a billion mobile connections, less than three out of ten smartphones today are smartphones. That number however is expected to grow to half a billion by 2020 with the cost of smartphones continually dropping and disposable income.

Bansal pointed that the move by Prime Minister Narendra Modi to root out black money would benefit the economy, but the government machinery should have ideated it effectively and roped in experts before going ahead with the withdrawal of Rs 500 and Rs 1,000 currency notes.

"I think the first thing we have to appreciate is this is a very hard challenge, it's much harder than running logistics at Flipkart. The intent is very good and I hope this is not a one-off. I think the removal of black money from the economy is going to be very beneficial for the economy and I don't think this is going to be the only step," he said. "I think from an execution point of view there is (the challenge has been big)."

The serpentine queues to withdraw and deposit cash in banks across India; the restrictions on withdrawal of cash and move to put indelible ink has also weighed on Bansal, who pointed that much of this could have been avoided with proper planning.

"The biggest problem that I see is that some of the calls made after the announcement have been very arbitrary in nature and they could have been anticipated or avoided in the first place. In hindsight, I would have done more research and would have roped in experts earlier on in the idea stage itself. Have an expert panel that can guide the government," Bansal said.