Amidst allegations that the government is forcing people to start doing cashless business transactions, Union Finance Minister Arun Jaitley today said digital transactions are not meant to substitute cash in the economy.
Amidst allegations that the government is forcing people to start doing cashless business transactions, Union Finance Minister Arun Jaitley today said digital transactions are not meant to substitute cash in the economy. Chairing the Fifth Meeting of the Consultative Committee attached to the Ministry of Finance on ‘Shift to Digital Transactions’, Jaitley said, “Digital transactions are a parallel mechanism, not a substitute, for cash transactions and the cashless economy is actually a less cash economy as no economy can be fully cashless.”
Talking to media today, Jaitley said the government wants to move from high cash to the less cash economy where the amount of paper currency will come down.
As per a PIB release, the finance minister said during the meeting that Union government is promoting digitisation “because an excessive cash economy has its own social and economic costs and consequences.”
Says that digital transactions are a parallel mechanism, not a substitute, for cash transactions; less cash can be gradually substituted to the possible extent through digital payments/transactions; Government and the RBI take various steps to bring down the cost of digital transactions.
Jaitley further said that “less cash can be gradually substituted to the possible extent through digital payments or transactions.” For this purpose, the government has also announced a lot of incentives for people to shift to the digital mode of payment. These include a significant reduction in MDR charges for payments up to Rs 2,000 made with debit cards. The transaction charge is 0.25% for payments up to Rs 1000 and 0.50% for payments between Rs 2000-1000.
Here are some other points on the implementation of digital transactions shared by the FM.
- Discount of 0.75% has been announced for the purchase of petrol/diesel through digital payment.
- 55 per cent petrol pumps in the country are accepting payment in digital mode. 52% of payments at petrol pumps are made by the digital mode.
- The Government and RBI are fully aware of cyber security challenges in the move and ensuring strong firewalls around the systems.
- The government is providing various incentives for digital transactions including debit card use.
- POS machines are manufactured by two companies in China and the Government has waved off duties on them.
During the meeting, several members raised security concerns in digital transactions. One of the members cited the example of Bangladesh Bank heist and expressed his concern about cyber security if digitisation is done at such a fast pace. Virtual currency, bitcoins were also discussed as bitcoins are believed to be used by black money hoarders.