House panel asks for more sops to boost digi payments
NEW DELHI: NEW INCENTIVES MIGHT HELP THE GOVERNMENT REDUCE CASH IN THE MARKET. INDIA’S CASH TO GDP RATIO WAS 12.2 % AT THE END OF MARCH 2016 AND 8.0% AT THE END OF MARCH 2018
A Parliamentary standing committee plans to ask the union finance ministry to incentivise digital payments across platforms and even for so-called merchant transactions in a move that could provide another boost to electronic or cashless payments.
The panel, a lawmaker said on condition of anonymity, will recommend that transactions on several digital platforms (phone, e-wallets, credit card) should also be eligible for incentives that are currently available only on BHIM based applications. This person added that it will also ask for the incentivisation of transactions other than the payment of insurance permia and payments at fuel stations that are currently eligible.
The recommendations, finalized in August, will come in the panel’s latest report on India’s transformation towards a digital economy. The report also assumes significance as the number of cashless transactions has hovered between 2.041 (February) and 2.224 billion (May) in the past six months without any steady growth.
After the demonetisation of Rs 500 and ₹1,000 currency notes was announced in late 2016, the government came up with a number of steps to incentivise digital payments including cash prizes, waiver in convenience fee and merchant discount rates.
While the panel appreciated the steps taken by the government to push lesser usage of cash, it wants more incentives, this time to also cover bulk transactions in the business to business (B2B) sector.
The latest suggestion of the finance panel also comes as the government plans to launch a pilot project for cash-back incentives on Goods and Services Tax (GST) payments if the payer users Rupay cards or the BHIM app. The maximum cash back would be Rs 100.
Meanwhile, the finance ministry also informed the panel that it is working with the Reserve Bank of India to enable a framework for determination of liability in case of frauds in digital transactions.
New incentives might help the government reduce the cash in the market. India’s cash to GDP ratio was 12.2 % at the end of March 2016 and 8.0% at the end of March 2018, albeit on an expan– ded GDP. Analysts say there is significant headroom for growth in both the number of digital transactions and payment facilities per million people.
The committee member cited above said: “Much more needs to be done to promote digital transactions. So far, the focus had been on consumers on some specific transactions.