One of the key arguments, that one can come across behind PM Narendra Modi’s demonetisation drive, is that he wants India to become a cashless economy. Following this, in Budget 2017, the government may announce a string of measures to take India on a path of cashless economy. According to a HT report, Incentives are on the cards for merchants promoting use of plastic money and income-tax benefits could be offered to those making payments electronically, sources said. “We will put in place several measures to push the use of debit and credit cards and also encourage digital payment…” a finance ministry official told HT on condition of anonymity.
“Customers and retailers both need to be in a win-win situation for using the digital payment mode,” the ministry official said, adding merchants, especially those running small businesses, would be encouraged to acquire POS (point of sale) machines to facilitate payments. The move would be in sync with the government’s objective of curbing black money, which gets generated when transactions are made in cash and without any record.
The demonetisation exercise has led to a surge in first-time debit card users. Bankers say the use of plastic money has more than doubled since November 8. To ensure that people use their debit cards more frequently, the government decided that no service charge will now be levied for use of debit cards. Department of Economic Affairs Secretary Shaktikanta Das said that till December 31, 2016, no service charges will be levied on debit cards and that the move is meant to ensure greater penetration of digital transaction. Meanwhile, to encourage digital transactions, the RBI also doubled the limit on the balance that one can keep in e-wallets. The limit has been enhanced from Rs 10,000 to Rs 20,000.
Speaking at HT Leadership Summit on December 2, finance minister Arun Jaitley said the process of remonetisation would reduce the quantum of paper currency after December 30. Level of paper currency released would not be same as before November 8, he said.