Moving towards less-cash India
Apropos of the column “Cashing out” by G Padmanabhan (FE, October 6), despite the increased cost of the cash transactions and the fast-developing digital payment platform, the appetite for cash deals is not declining. The mindset of the people, irrespective of geographical location and literacy levels, is less skewed towards any remittance-and-payment system other than cash. Attitudinal change across the width and length of the country is needed to ensure fast migration to digital payment. The government, Reserve Bank of India and the tax departments have to play a vital role to curtail cash-transactions. Growing cyber-crime is also posing threats to the extensive use of internet banking and other digital platforms. Foolproof cyber security systems must be in place to ensure comprehensive protection in the carrying out of transactions. Various benefits from the governments to the eligible beneficiaries must strictly be routed through the bank accounts. The cash withdrawals from ATMs need to be gradually discouraged to get people to hold as less currency as possible. Cheques and demand drafts are to be used for payment considerations. Awareness programmes among the financially illiterate will have to be extensively conducted to make them inclined to use digital payment platforms for transactions. The cost of the internet banking and online transactions should be nominal and user-friendly. Tax authorities must bring down the threshold limit for cash-deals and need to keep the transactions under the lens. Since minimising the use of currency will reduce cost and risks, the government must mount even stronger measures to push the country towards a less-cash economy.
VSK Pillai, Kottayam (Kerala)
The economy’s silly season
We seem to remain a reluctant economy. India’s economic indicators have shown neither elasticity nor enthusiasm in their response to even the significant drop of 150 basis points in the key rate over the past six quarters. Industry and financial institutions have not leveraged this sustained monetary-easing by RBI. Instead, they have jointly managed to spike NPAs. Thus, the current marginal paring of key rates by 25 basis points would appear to be more in pious hope than serious design. The IIP fell 2.4 % this July over the corresponding month the year before. The gross fixed capital formation rate is steadily dipping. The economy, clearly, is in no state to generate surpluses. The mounting defence purchases and wage increases will further skew the books. Crude prices, that are now saving us the blushes by staying low, can be fickle .Where then are funds for future growth? Without course correction, we might well continue with this ‘silly season’ of the economy. The NDA government, known to favour consumption over savings, must restore due importance to the virtue of thrift and of domestic savings as a necessary precursor to growth. Savings have steadily dropped from 11.63% of GDP in FY08 to a 22-year-low, of 7.8% in FY12 and then to 7.2% in FY14. China clocks 50% in gross domestic savings against our sub-30%, and this gap reflects as much the state of the two economies.
R Narayanan, Ghaziabad
Strange to celebrate IDS
Today, there was an advertisement by the government, thanking tax-payers, tax-professionals and others for making the IDS 2016 a big success. I don’t understand what is there to celebrate about income disclosure. How can the government thank those who hoarded black money for years, remained tax non-compliant as proved by the disclosure and disclosed assets under the threat of scrutiny and prosecution? The government should instead publish the list of such people, highlighting that they are the offenders who enjoyed all benefits at the cost of honest tax-payers. Let the whole country know who are the black sheep in the neighbourhood.
Kamalji Sahay, Mumbai