Finance Minister Arun Jaitley on Thursday said 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.
Chairing the fifth meeting of the Consultative Committee attached to the Finance Ministry, Jaitley assured that the Government and the Reserve Bank of India (RBI) were taking all possible measures to bring down the digital transaction cost with an aim to move towards a less-cash economy.
In order to make cashless economy a success, the Centre recently announced various incentives to attract people to digital modes of payment.
“The response on digital transactions is quite positive so far and the Government and the RBI have taken various steps to bring down the cost of digital transactions and specifically mentioned Merchant Discount Rate charges,” said an official release.
However, the Finance Minister told the participating Members of Parliament that the Government was trying to encourage digitisation as much as possible because an excessive cash economy has its own social and economic costs and consequences.
“less cash can be gradually substituted to the possible extent through digital transactions,” he said.
Citing the success stories, Jaitley said, “About 55 per cent petrol pumps in the country are accepting payment through digital means and with the Government providing incentives, more people are switching to this mode.”
“The Government is conscious of the need for cyber security of high level to secure digital payments,” he added.
Promising to check cyber frauds, he also told the MPs, “The Government and RBI are fully aware of cyber security challenges and ensuring strong firewalls around the systems. As part of efforts to promote e-payments, the Government is providing various incentives for digital transactions including on debit card use.”
Regarding the availability of Point of Sale machines, he said they are manufactured by two companies in China and the Government has waived duties so that these machines become cheaper and reach the shopkeepers easily.
Expressing their views, MPs cited the example of Bangladesh Bank cyber heist and expressed concern about cyber security if digitisation is done at such a fast pace. The issue of virtual currency, Bitcoins was also raised as they are believed to be used by black money hoarders.
Regarding connectivity and infrastructure issues in rural India, suggestions were made to strengthen the institution of business correspondents. Some members raised the concern that Aadhaar alone should not be basis for bank transactions and banks should keep their Know Your Customer norms strict along with Aadhaar.
“Suggestions that infrastructure for internet facility on continuous and permanent basis, without disruption, has to be ensured for making digital payments successful, especially in sub-urban and rural areas, were also made,” Jaitley added.
Some MPs also suggested that security measures were required both in case of hardware and software in order to secure the data and transactions made through digital mode.