The core group of ministers, which has been tasked by the Prime Minister’s Office (PMO) to suggest ways to promote cashless transactions, has recommended to the government to subsidise Android smartphones for popularising imobile banking in rural areas.

The ministerial panel came up with this suggestion in a meeting on Wednesday, which was followed by three rounds of meetings on Thursday at the PMO, at Ministry of Road Transport and Highways and Shipping and NITI Aayog, sources told BusinessLine.

“To popularise Android smartphones on subsidised rates, two meetings took place – one at the PMO and the other with Nitin Gadkari – and a third meeting was held at the NITI Aayog with various State Chief Ministries via video conferencing,” a government official said.

According to industry veterans and analysts, subsidising smartphones may not be feasible. It could also be seen as benefitting select smartphone makers and lead to criticism from the Opposition parties.

Connectivity issues

“Feasibility of this is only one part of the issue, but there are several other challenges facing ‘Digital India’. This decision (subsidising smartphones) rests on the belief that lack of devices is the biggest barrier. However, there are other factors too. For example, networks/data connectivity is not as ubiquitous as we like to believe,” said Mahesh Uppal, Founder, ComFirst, a consultancy firm.

There is little support for local languages, familiarity, and literacy — especially digital literacy — is low, he said adding that access to smartphones is only a part of the solution.

“Financially subsidising the roughly 0.5 billion smartphones that may be needed, can be expensive and difficult — even, controversial. Choosing technologies, brands, vendors, and features could be a nightmare. The smartphone market is competitive and poorly implemented subsidies can distort it,” Uppal added.

The government has been throwing up a lot of ideas to promote digital payments and on Wednesday, the GoMs also discussed how Aadhaar can be utilised for such transactions.

If smartphones that have iris scanner or fingerprint reader, those Android phones users can digitally transact using their Aadhaar numbers and fingerprint/iris authentication, said Ajay Pandey, Director General at UIDAI.

However, all these ideas would require a multi-pronged strategy, including talking to mobile phone manufacturers, merchants and banks, he added.

The government has constituted a 13-member committee comprising State chief ministers and special invitees to implement cashless transactions and take forward the digitisation programme.

However, according to a government official, V Narayanasamy, Chief Minister of Puducherry, has withdrawn from this Committee.