INTERVIEW/C. Naidu

“There should not be any levy on digital transactions”

Andhra Pradesh Chief Minister N. Chandrababu Naidu was the prime mover behind Cyberabad, the information technology hub that hosts global giants such as Microsoft, as an extension to the twin cities of Hyderabad and Secunderabad. After the loss of Hyderabad to Telangana, the new state carved out of Andhra Pradesh, he is scripting another infrastructure development story around Amaravati, Andhra’s new capital city in the making. Naidu, in New Delhi to present the interim report of the committee of chief ministers on promotion of digital payment systems, which he heads, spoke to Joe C. Mathew about India’s digital future and plans for his state. Edited excerpts

Digital infrastructure is fairly good in cities. But there is a lot to be done in other areas. What are the bottlenecks? What needs to be done?

That is what we are saying in the report. We will discuss it with the prime minister also. The prime minister has announced Digital India but our infrastructure has not matured. It is very weak. We need last-mile fibre connectivity. A day will come when your call charges will be calculated on the basis of per capita consumption of fibre connectivity. This is what is happening (in Andhra Pradesh). I am going to give 15 mbps to every home within one year. It will be cost effective, as we are taking fibre through electric poles by spending only 60-70 per cent of what it would have cost us if we had used underground cables. By using the savings, I can give all channels and videos free, and also internet, to every household.

Interconnectivity issues, fight between wallets and banks, we are seeing all these things now. The regulations seem to be unable to deal with such problems. What are your recommendations in this regard?

This is crucial. We have to create a new authority that can regulate fintech technologies and handle cyber security issues. Our experts are working all over the world. They are creating so many cyber security patent rights for their companies. Our government system may not understand these developments but technology, with Internet of Things, is progressing in a manner that no one can ignore it. Machine learning, drones, there have been several developments for which we need new cyber laws. At the same time, India has this unique proposition of having your fingerprint as your bank (for authentication for banking transactions). It is

more secure than PIN- based systems. Aadhaar is our way ahead. Every bank will adopt it.

Will your state take an initiative to formulate some of these regulations?

I am going on my own. Whenever the Centre comes in, we will synchronise the laws. However, some of the issues are within the Centre’s purview. I need its permission to proceed.

What, according to your committee, should be the transaction charges for digital payments?

We are clear on this. The charges will be less than (the costs of transacting in) physical currency. There should not be any levy on digital transactions. Only then will everyone go for this. Otherwise, what is the advantage? You are only penalising people for transacting digitally. Cash currency has to be reduced. For this, digital currency has to be cost-effective if you want people to shift to the new system.

Will banks agree to forego these charges?

The government should give them that margin. How much money is being spent on printing, transportation, wear and tear of cash? Once you go digital, you are saving all this expenditure. These savings can be utilised to pay the banks. Will wallets and BHIM play a major role in future? Wallets are only for providing temporary relief. They are not the solution. The solution is online transactions and direct transactions or BHIM and UPI.

What are you doing to promote fintech in your state?

I am bringing companies from all over the world. We are working on cyber security and big data in a big way.

How much investment has come into the state?

We are getting good investments. We started with negative investments. After the bifurcation, we were left with no cash, no industry and no institutions. All these years we had invested in Hyderabad. The day we bifurcated, we had a `16,000 crore deficit. We are now number one in the ease of doing business (ranking). In just two-anda-half years, all new power projects are coming to us, our MNREGA implementation is the most efficient....

How do you find money?

We are spending funds with most efficiency and convergence. We are using technology for savings.

You are talking about attracting investments. Will it be private investment? Or largely government funding?

There are three areas of infrastructure. One is connecting infrastructure, which is fibre. Second is back-end infrastructure for banks, and the third is final touch points - smart phones, mobile POS, E- POS, computers, etc. We have to progress simultaneously in all three areas. Only then will fintech penetration happen. India’s advantage is UIDAI and Aadhaar. Whenever you need to transact online, the basic authentication tools are ready. Broadly, private investments will happen, and government will give incentives wherever required. Public-private partnerships can happen.

What has been the progress so far?

In two years, we have been able to introduce ePOS at all our public distribution system centres. We are now able to make all pension disbursements online using biometrics. MNREGA workers are being paid online. Every month more than 2.5 crore transactions — 1.5 crore ration card holders, 43 lakh pensioners/labourers — are happening in this manner. ~

“THERE ARE THREE AREAS OF INFRASTRUCTURE. ONE IS CONNECTING INFRASTRUCTURE, WHICH IS FIBRE. SECOND IS BACK-END INFRASTRUCTURE FOR BANKS, AND THE THIRD IS FINAL TOUCH POINTS - SMART PHONES, MOBILE POS, E-POS, COMPUTERS, ETC. WE HAVE TO PROGRESS SIMULTANEOUSLY IN ALL THREE AREAS. ONLY THEN WILL FINTECH PENETRATION HAPPEN.”