The government’s flagship Digital India mission is all set to touch millions of lives. The digital profile of India will remain incomplete unless the Indian economy is empowered digitally. Crafting a cashless economy and driving the use of digital cash will be key for the Indian economy.
Digital payments is gradually picking up in India with debit cards and is overtaking cash as the most preferred mode of payment. Paperless transactions through the internet, ATM, cards and mobile devices have recently surpassed paper-based ones reiterating the fact that India is steadily moving the digital way. The government and policy makers have realised that digital money is going to be imperative for driving ‘Digital India’.
There is a lot of anticipation from the government to spell out measures to incentivise card transactions in the economy.
Bridging the gap
For digital money to compete in a cash-heavy society, it is extremely critical that the government undertakes initiatives to bring about parity between the two structures. We look forward to:
–Easy access to e-payment instruments need to be addressed
–Build parity between the physical and digital pillars.
–RBI can look at setting up digital money issuing or an e-currency infrastructure at par with cash and regulated just like cash.
Incentivising the cashless model
The usage of digital money therefore needs to be endorsed through several measures which could include:
–Introduction of a rebate on expenses for transactions undertaken digitally, or a tax benefit to the end consumer among others. Even subsidising
–Import duty levied on a point of sales (POS) terminal which actually forms a part of the digital infrastructure would indirectly benefit the system.
–At the consumer front, PAN is currently mandatory for the purchase of cash or prepaid cards amounting to Rs 50000 or more in a year. This limit can be raised to Rs 2 lakh.
–The investments undertaken in the digital payments space is huge and involves long gestation periods. Hence the government can also look at providing a tax holiday of about 10-12 years to investors within this ecosystem.
Parching the cash stream
In a bid to boost cashless economy, disincentivising cash would prove to be another key strategy for the government attracting more takers to the digital model. Levying a charge on all cash transactions made by any mode beyond a set limit by the regulatory authority will have a huge impact on the general inclination that consumers have towards cash, thus driving the digital penetration in the country.
The policies pertaining to the digital payments need to be unified at the macro level within the government as well as the financial services sector so that more and more things are aligned centrally such that a customer who undertakes a digital transaction is not restricted to any industry standardisation. This, in turn,would not only help reduce duplication of efforts but also allocate a national recognition to the digital infrastructure thus attracting more takers to the digital model driving the digital India mandate.
Building national awareness
Poor acceptance of digital money by sellers and lack of awareness about cashless systems / options are the two main reasons being cited by a report by India Development Fund and Internet Mobile Association of India. Hence building awareness in a national platform is extremely critical for ensuring deep penetration of the digital model across the economy.
The author is Managing Director, ItzCash Card Ltd.