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The Narendra Modi government, since its inception, has been promoting digital payments to make digital inclusion the cornerstone of the economy.
For further transparency in digitisation, it has proposed more initiatives for digital payments in the Budget.
In her maiden Budget speech, Finance Minister Nirmala Sitharaman said that the government has taken a number of initiatives in the recent past for the promotion of digital payments and a less-cash economy, and to push this further, she proposed a slew of measures.
Reduce cash payments
Key measures planned include extensive use of digital channels for payment.
“To discourage the practice of making business payments in cash, I propose to levy a TDS of 2 per cent on cash withdrawals exceeding ₹1 crore in a year from a bank account. Further, there are low-cost digital modes of payment such as BHIM UPI, UPI-QR Code, Aadhaar Pay, certain debit cards, NEFT and RTGS, which can be used to promote a less-cash economy,” she said.
She, therefore, proposed that business establishments with an annual turnover more than ₹50 crore should offer low-cost digital modes of payment to their customers, and that no charges or merchant discount rates should be imposed on customers or merchants.
She said that the Reserve Bank of India and banks would absorb these costs from the savings that will accrue to them on account of handling less cash, as people move toward these digital modes of payment.
“Necessary amendments are being made in the Income Tax Act and the Payments and Settlement Systems Act, 2007 to give effect to these provisions,” she added.
Boost for start-ups
“The growth of a rapidly developing economy like India definitely lies in developing a more robust and frictionless cashless payment system. The proposed initiatives by the government to promote digital modes of payment will help in reducing the infrastructural cost of cash management, and contribute towards a transparent economy,” said Kumar Abhishek, CEO and co-founder of ToneTag, a sound-based digital payment solution provider backed by Amazon, Reliance Capital, Mastercard and Amansa.
“We believe the government has taken meaningful steps to bolster the growth of the start-up ecosystem as well as promoting a cashless economy, and we are looking forward to the Indian economy growing rapidly in the next five years,” Gaurav Jalan, Founder and CEO of mPokket, said.
Similarly, industry body Nasscom commended the proposals announced by the FM. “It is encouraging to see the government’s positive intent towards developing a robust digital infrastructure for the country. Progressive measures to assist the growth of fintech start-ups indicate the government’s commitment to develop a robust start-up ecosystem in the country,” Kunal Bahl at Start-up Council, Nasscom, said.
Increase in transactions
Under the ‘Digital India’ programme, the Ministry of Electronics and IT (MeitY) has effectively utilised digital technologies to transform lives of people, while ensuring digital inclusion of all the segments, MeitY Minister, Ravi Shankar Prasad, had recently informed the Parliament.
He had also said that digital pay ment transactions had grown multi-fold from 316 crore in 2014-15 to 2,182 crore in 2018-19.
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