In the repercussion of the
cancellation of the legal tender character of old INR 500 and INR 1000 notes,
there has been a surge in the digital transactions through use of credit/debit
cards and mobile phone applications/e-wallets etc. To further accelerate this
process, the Central Government has come out with various incentive packages
and measures for promotion of digital and cashless economy in the country.
Digital India is a programme initiated to prepare India for a knowledge future.
The Digital India programme is a
leading programme of the Government of India with a vision to transform India
into a digitally empowered society and knowledge economy. “Faceless, Paperless,
Cashless” is one of stated role of Digital India. As a part of promoting
cashless transactions and converting India into less-cash society, various
modes of digital payments are available such as Banking cards, USSD (the
Unstructured Supplementary Service Data), AEPS (Aadhaar Enabled Payment
System), UPI, Mobile wallets, Banks Pre-paid Cards, Points of Sale, Internet
Banking, Mobile Banking and Micro ATMs.
Some of the
incentives/measures taken by the Government are –
- The Central Government Petroleum PSUs has initiated
to give inventive by offering a discount at the rate of 0.75% of the sale
price to consumers on purchase of petrol/diesel if payment is made through
digital means.The incentive scheme has the potential of shifting at least
30% more customer to digital means which will further reduce the cash
requirement of nearly INR 2 lakh crore per year at the petrol pumps.
- In order to enhance the digital payment
infrastructure in rural areas, the Central Government through National
Bank for Agriculture and Rural Development (NABARD) will extend the
financial support to eligible banks for deployment of 2 Point of Sale
(POS) devices each in 1 Lakh villages with the population of less than
10,000. These POS machines are intended to be deployed at primary
cooperative societies/milk societies/agricultural input dealers to
facilitate agri-related transactions through digital means. This will
further benefit farmers of one lakh village covering a total population of
nearly 75 crore who will have facility to transact cashlessly in their
villages for their agri needs.
- The Central Government through NABARD will also
support Rural Regional Banks and Cooeprative Banks to issue “Rupay Kisan
Cards” to 4.32 crore Kisan Credit card holders to enable them to make
digital transactions at POS machines/Micro ATMs /ATMs.
- Railway through its sub urban railway network shall
provide incentive by way of discount upto 0.5% to customers for monthly or
seasonal tickets from January 2017, if payment is made through digital
- All railway passengers buying online ticket shall be
given free accidental insurance cover of upto INR 10 Lakh.
- For paid services e.g. catering, accommodation,
retiring rooms etc. being offered by railways through its affiliated
entities/corporations to the passengers, it will provide a discount of 5%
for payment of these services through digital means. All the passengers
travelling on railways availing these services may avail the benefit.
- Public sector insurance companies will provide
incentive, by way of discount or credit, upto 10% of the premium in
general insurance policies and 8% in new life policies of Life Insurance
Corporation sold through the customer portals, in case payment is made
through digital means.
- The Central Government Departments and Central Public
Sector Undertakings will ensure that transactions fee/MDR charges
associated with payment through digital means shall not be passed on to
the consumers and all such expenses shall be borne by them. State Governments are being advised that
the State Governments and its organizations should also consider to absorb
the transaction fee/MDR charges related to digital payment to them and
consumer should not be asked to bear it.
- Public sector banks are advised that merchant should
not be required to pay more than INR 100 per month as monthly rental for
PoS terminals/Micro ATMs/mobile POS from the merchants to bring small
merchant on board the digital payment eco system.
- No service tax will be charged on digital transaction
charges/MDR for transactions upto Rs.2000 per transaction.
- For the payment of toll at Toll Plazas on National
Highways using Radio-frequency Identification (RFID) card/Fast Tags, a
discount of 10% will be available to users in the year 2016-17.
Further to above incentives
provided, Government also announced new Yojana’s post demonetization. As India
move towards a digital and cashless economy, the Government announced two
schemes lucky Grahak Yojana and Digi-Dhan Vyapar Yojana to give cash awards to
consumers and merchants who utilize digital payment instruments for personal
consumption expenditures. The prizes range from INR 1000 to INR 1 crore and the
transactions permitted are from INR 50 to INR 3000 to keep the focus on the
common man. The schemes will not only give a boost to cashless transactions,
but will particularly bring the poor, lower middle class and small businesses
into the digital payment fold, and new way of life.
Future of Cashless and Digital
The year 2017 is an important
milestone for India and would mark transition from a largely cash economy to a
less cash and a more digital economy. But the buzzwords like “less cash”,
”cashless” and “digital” do not really convey the range and diversity of the
transition. It is actually a transition to a new social and behavioral pattern.
Migrating from a cash economy to a digital economy requires a big behavioral
and social shift, and a recast of the whole mindset. Making gadgets available
to the society will not help unless we bring about a social and behavioral
A surge in non-cash transactions
through digital options such as mobile wallets and debit cards is a clear sign
that India is gradually embracing the cashless economy, but it remains to be
seen if this will continue when new currency notes come into circulation.
However, one of the major
concerns would be digital security. It may be noted that to have a smooth
transition to a digital economy, the government needs to have a policy of
digital security. A strong digital security and low risk will enhance the
spread of digital/cashless economy.
For more detail download-
Acquisory News Chronicle - December 2016