The Union Budget, as anticipated, has laid clear emphasis on digitisation and bringing in greater transparency in economic transactions. Several initiatives have already been undertaken by the government in this direction as post-demonetisation move.
Various suggestions have also been shared by the Ratan Watal committee and more recently by the Chief Ministers’ committee to promote digital transactions in the country. Today’s budget has further reiterated the seriousness of the government to convert India into a less cash economy and to remove the existence of black economy from the system.
A number of steps have been announced in the budget which would encourage people to use digital or electronic modes of payment, particularly addressed to those who still do not have payment cards like launch of a merchant version of Aadhar Enabled Payment System which will not require the other payment modes like debit cards, mobile wallets or mobile phones, and launch of two new schemes - Referral Bonus Scheme for individuals and a Cashback Scheme for merchants to promote the use of BHIM. On the supply side, 20 lakh Aadhar based PoS machines will be introduced by banks by September 2017. Announcement of abolition of service tax on railway tickets that are booked online will also increase the popularity of e-tickets further.
As compared to urban areas, it has been observed that the level of digitisation in rural areas is relatively lower. The government has therefore rightly decided to promote digitisation in these areas by involving a host of entities into the process like post offices, fair price shops, banking correspondents as well as petrol pumps, fertilizer depots, municipalities, universities, colleges, hospitals etc. This is a smart move which could bring the rural sector at par with the urban areas in terms of digitisation.
Setting up a mission with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards will also provide the necessary direction to the government’s agenda of building a cashless economy. Creation of a Payments Regulatory Board in the RBI will help in resolving the conflicts that could arise as the use of online transactions increase.
A prerequisite for the success of all the above initiatives however is the development of the IT and telecom infrastructure and this aspect too has been addressed well by the budget. Here too, the thrust has been more on the rural side of the economy with more than 1.5 lakh gram panchayats proposed to be connected with high speed broadband internet connection. The increase in expenditure on the Bharat Net project to Rs 10,000 crore for the next fiscal is also encouraging. This will help create more internet users, and eventually digital modes of transaction. Moreover, development of the IT infrastructure is also critical for the success of government’s other programmes such as Digital India and Make in India.
Exemption of excise/CV duty and SAD on miniaturised POS card reader for m-POS, micro ATM standards, Finger Print Readers/Scanners, Iris Scanners as well as on the parts and components used for manufacturing these devices is a welcome move as it would encourage manufacturing of these machines in India thereby increasing the affordability and availability of these machines, which in turn would drive the adoption of these machines by service providers.
Placing a limit on cash expenditure allowable as deduction to INR 10,000, reduction in cash donation received by a charitable trust from INR 10,000 to INR 2000, disallowing cash transaction above INR 3 lakh are some of the efforts put forward by the government to discourage the use of cash.
Announcement to start a digital literacy programme for women and children especially in villages through Mahila Shakti Kendras is an important area which has been given due attention in the budget, as level of awareness, and knowledge of use as well as the benefits of digital payment modes is significantly low in India particularly in the rural segment of the society and has been a major hindrance towards digitisation.
Another area of serious concern is that of cyber security which has also been addressed in the budget. This has been done through the proposed Computer Emergency Response Team for financial sector.
Efforts of bringing in transparency in the electoral funding, which is one of the major creators of black money in the economy, have also been made. Measures like restricting cash donations to INR 2000 per donor, while allowing political parties to receive donations by cheque or digital mode as well as the proposal to issue electoral bonds whereby a donor could purchase bonds from authorised banks against cheque and digital payments only, which shall be redeemable only in the designated account of a registered political party, are a commendable move.
(The author is president, FICCI)
Updated Date: Feb 02, 2017 09:36 AM