Digital transactions are parallel mechanism not substitute for cash transactions: Jaitley

Speed Post News Network

New Delhi : Union Finance Minister Arun Jaitley on December 15 said that digital transactions are a parallel mechanism not a substitute for cash transactions and cashless economy is actually a less cash economy as no economy can be fully cashless.He said the government is trying to encourage digitization as much as possible because an excessive cash economy has its own social and economic costs and consequences. He said that less cash can be gradually substituted to the possible extent through digital payments/transactions.

Jaitley said that the government has given lot of incentives to the people to shift to digital mode of payment and the response is quite positive in this hregard. Jaitley was making his opening remarks at the 5th Meeting of the Consultative Committee attached to the Ministry of Finance. The subject of the meeting was “Shift to Digital Transactions”.

The Union Finance Minister said that the government and the RBI have taken various steps to bring down the cost of digital transactions. He specifically mentioned about the MDR charges which have been brought down significantly in case of transactions up to Rs.2,000 made through debit cards i.e. 0.25% in case of transactions below Rs 1,000 and 0.50% in case of transactions between Rs 1,000 to Rs 2,000. The Finance Minister mentioned that incentives announced by the government last week relating to discount of 0.75% in case of purchase of petrol/diesel through digital payment has shown a very encouraging response by the people by and large, according to a PIB release. The Central government petroleum PSUs/Oil Marketing government Companies were asked by the government to give incentive by offering a discount at the rate of 0.75% of the sale price to consumers on purchase of petrol/diesel if payment is made through digital means.

The Finance Minister said that today 55% petrol pumps in the country are accepting payment in digital mode and force of circumstances and incentives is causing a movement in digital direction. After December 2, 2016 when the acceptance of old Rs 500 notes was withdrawn at petrol pumps, 52% of the payments are made by the digital mode. The Finance Minister said that the government is conscious of the need of the cyber security of high level to secure digital payments. He said that the government and RBI are fully aware of cyber security challenges in the move and ensuring strong firewalls around the systems, the PIB release said. Keeping in mind that Indian consumer is cost conscious, Jaitley said that the  government is providing various incentives for digital transactions including debit card use. Regarding the availability of POS machines, Jaitley said that POS machines are manufactured by two companies in China and the government has waved off duties on them so that these machines become cheaper and reach the shopkeepers easily.

Many members of the Consultative Committee appreciated the initiatives taken by the government to incentivise digital mode of payment and specifically mentioned about 0.75% discount given by the oil marketing companies. Some suggestions included that infrastructure for having internet facility on continuous /permanent basis, without any disruption, has to be ensured for making digital payments successful especially in sub-urban and rural areas.

Some members suggested that security measures are required both in case of hardware and software in order to secure the data and the transactions made through digital mode. Jaitley assured the members of the committee about cyber security measures being taken by the banks under RBI supervision.