Finance Minister Arun Jaitley said on Thursday global payment gateways like Mastercard and Visa are losing market share to indigenous RuPay card and UPI payment system.
In a Facebook post marking the second anniversary of demonetisation, the Minister said note ban has increased digital transactions.
“Today, Visa and Mastercard are losing market share in India to indigenously developed payment system of UPI and RuPay card whose share has reached 65 per cent of the payments done through debit and credit cards,” Jaitley said.
Unified Payment Interface (UPI) was launched in 2016 involving real time payments between two sets of mobile holders.
Its transactions have grown from `50 crore in October 2016 to `59,800 crore in September 2018.
Besides, the Bharat Interface for Money (BHIM) app developed by National Payments Corporation of India for quick payment transactions using UPI, is currently being used by 1.25 crore people.
The value of BHIM transactions has gone up from `2 crore in September 2016 to `7,060 crore in September 2018. The share of BHIM transactions in overall UPI transactions is at about 48 per cent in June 2017.
Terming the criticism, that almost the entire cash money got deposited in the banks post demonetisation, as “ill-informed”, Jaitley said confiscation of currency was not an objective of demonetisation.
“Getting it into the formal economy and making the holders pay tax was the broader objective. The system required to be shaken in order to make India move from cash to digital transactions. This would obviously have an impact on higher tax revenue and a higher tax base,” Jaitley said.
The Government had on November 8, 2016, announced ban on old 500 and 1000 rupee notes, to curb black money in the system.
Of the `15.41 lakh crore worth `500 and `1,000 notes in circulation on November 8, 2016, 99.3 per cent or notes worth `15.31 lakh crore have returned to the banking system.
This means, just `10,720 crore of the junked currency did not return to the banking system.
After the note ban, old junked notes, called specified bank notes (SBNs), were allowed to be deposited in banks with unusual deposits coming under income tax scrutiny. Jaitley said demonetisation compelled holders of cash to deposit the same in the banks.
“The enormity of cash deposited and identified with the owner resulted in suspected 17.42 lakh account holders from whom the response has been received online through non-invasive method,” he said.
The violators faced punitive actions. Larger deposits in banks improved lending capacity for the banks. A lot of this money was diverted to mutual funds for further investments. It became a part of the formal system, Jaitley added.
He said the share of indigenously developed payment system of unified payments interface (UPI) and RuPay card have reached 65 per cent of the payments done through debit and credit cards.
In 2017-18, the tax returns filed reached 6.86 crore, an increase of 25 per cent over the previous year. This year, as on October 31, 2018, already 5.99 crore returns have been filed - which is an increase of 54.33 per cent compared to the previous year.
Economic Affairs Secretary Subhash Chandra Garg said demonetisation and GST reflect long-term vision of the government and its ability to undertake massive structural reforms. “Tax filers under both direct and indirect taxes are close to getting doubled. Digital payments have risen sharply and become common place. Fake notes are out,” Subhash ChandraGarg tweeted.