Digital and Cashless Economy : A New Way of Life after demonetization

Pay Digital and Win Prizes! As India moves towards a digital and cashless economy, Govt announced Lucky Grahak and Digi-Dhan Vyapar Yojana
Deepak Razdan

Pay Digital and Win Prizes! As India moves towards a digital and cashless economy, the Government announced on 15th December, 2016 two schemes Lucky Grahak Yojana and Digi-Dhan Vyapar Yojana to give cash awards to consumers and merchants who utilize digital payment instruments for personal consumption expenditures. The prizes range from Rs 1000 to Rs 1 crore and the transactions permitted are from Rs 50 to Rs 3000 to keep the focus on the common man. The schemes will not only give a boost to cashless transactions, but will particularly bring the poor, lower middle class and small businesses into the digital payment fold, and new way of life.

The poorest of poor will be eligible for rewards by using USSD, (the Unstructured Supplementary Service Data) System that is applicable to ordinary GSM mobile phones. People in village and rural areas can participate in this scheme through Aadhaar Enabled Payment System (AEPS). The scheme will become operational with the first draw on 25th December, 2016 (as a Christmas gift to the nation) leading up to a Mega Draw on Babasaheb Ambedkar Jayanti on 14th April 2017.

The Lucky Grahak Yojana for Consumers provides a daily reward of Rs 1000 to be given to 15,000 lucky consumers for a period of 100 days; and weekly prizes of Rs 1 lakh, Rs 10,000 and Rs. 5000 for Consumers who use the alternate modes of digital Payments. This will include all forms of transactions viz. UPI (Unified Payment Interface), USSD, AEPS and RuPay Cards, but will for the time being exclude transactions through Private Credit Cards and Digital Wallets. The Digi-Dhan Vyapar Yojana for Merchants provides Prizes for Merchantsfor all digital transactions conducted at Merchant Establishments and weekly prizes of Rs. 50,000, Rs 5,000 and Rs. 2,500.

There will be a Mega Draw on 14th of April – Ambedkar Jayanti. This will give three Mega Prizes for consumers worth Rs 1 crore, Rs 50 lakh, Rs 25 lakh for digital transactions between 8th November, 2016 and 13th April, 2017 to be announced on 14th April, 2017. For merchants too, there will be three Mega Prizes worth Rs 50 lakhs, Rs 25 lakh, Rs 12 lakh for digital transactions from 8thNovember, 2016 to 13th April, 2017 to be announced on 14th April, 2017.

The National Payment Corporation of India (NPCI), a not for profit company, which has the mandate to guide India towards a cashless society, is the implementing agency for the schemes. The NPCI has been directed to ensure a technical and security audit of the same to ensure that the technical integrity of the process is maintained. The Government shall incur an estimated expenditure of Rs 340 crores on the first phase of the scheme (up to 14th April, 2017).

The Centre has approved a slew of initiatives in February 2016 to encourage digital payments and a transition to less-cash economy in a strategic manner. Prime Minister Narendra Modi had highlighted these measures in his Man Ki Baat address in May 2016. Urging people to adopt cashless transactions, he said “If we learn and adapt ourselves to use cashless transactions, then we will not require notes. Under-hand dealings will stop; the influence of black money will be reduced. So I appeal to my countrymen, that we should at least make a beginning. Once we start, we will move ahead with great ease. Twenty years ago who would have thought that so many mobiles would be in our hands. Slowly we cultivated a habit and now we can’t do without those. Maybe this cashless society assumes a similar form. But the sooner this happens, the better it will be.”

Towards this end, the Government had launched a major drive for financial inclusion in terms of opening Jan Dhan accounts, giving a statutory basis for Aadhaar, implementation of Directs Benefits Transfer, introduction of RuPay Cards and Voluntary Disclosure Scheme for unaccounted money. Demonetization of 500 and 1000 Rs. notes on 8th November was another important milestone in this endeavour. Following demonetization, there has been a spurt in the digital payments across the country and both the volume and amount of money transacted through digital methods saw seen manifold increase since 9th November.

Yet, as on date, nearly 95 per cent of India’s personal consumption expenditure transactions are cash-based giving rise to a  very large informal economy, limiting the ability of State to levy and raise taxes. The daily Ru-Pay Cards transactions in the country have risen from 3.85 lakh on 8th November to 16 lakh on 7 December; the e-Wallets transactions have increased from 17 lakhs to 63 lakhs; the UPI transactions from 3721 to 48238; the USSD from 97 to 1263 and PoS (Point of Sale) transactions from 50.2 lakh to 98.1 lakh.

To further accelerate the surge in digital transactions, the Government announced on 8th December an attractive package to promote the use of cashless payments through various concessions like a discount at the rate of 0.75 per cent of the sale price to consumers on purchase of petrol or diesel, if payment is made through digital means. To expand the digital payment infrastructure in rural areas, the Central Government through NABARD decided to extend financial support to eligible banks for deployment of two PoS devices each in one Lakh villages with population of less than 10,000.  These PoS machines are intended to be deployed at primary cooperative societies, milk societies and agricultural input dealers to facilitate agri-related transactions through digital means and serve 75 crore population.

No service tax will be charged on digital transaction charges for transactions upto Rs.2000 per transaction. Railway through its sub urban railway network shall provide incentive by way of discount upto 0.5% to customers for monthly or seasonal tickets from January 1, 2017, if payment is made through digital means. Government has waived service tax charged while making payments through credit card, debit card, charge card or any other payment card; limiting the waiver to payments up to Rs. 2,000 in a single transaction

On 6th December, the Government, as part of the plan to expand the digital payments eco-system and facilitate the move towards cashless transactions, decided that an additional one million new PoS terminals should be installed by 31st March 2017. The Ministry of Labour & Employment and States’ Administration organized 2,73,919 camps to open 24.54 lakh bank accounts for unorganized workers.

Recommending a medium term strategy to promote the growth of digital payments, the Committee on Digital Payments constituted by the Ministry of Finance on 9th December submitted its Final Report to the Finance Minister and wanted the benefits to cover the financially and socially excluded groups.

Explaining the Government policy before the Finance Ministry’s Parliamentary Consultative Committee meet on 15th December, Finance Minister Arun Jaitley said that digital transactions were a parallel mechanism, not a substitute, for cash transactions and cashless economy was actually a less cash economy, as no economy could be fully cashless. The Finance Minister said that the Government was trying to encourage digitization as much as possible because an excessive cash economy had its own social and economic costs and consequences. The Government incentives to people had evoked a positive response to shift to digital mode of payment. Cyber security measures, he said, were being taken by the banks under RBI supervision.

*Deepak Razdan is a senior journalist and presently Editorial Consultant with The Statesman, New Delhi.

Source- PIB
Categories: Finance

View Comments (3)

  • If Companies like PayTM, JioMoney, Aircell, Airtell, idea can penetrate villages and encourage Petty Shops to recharge and pay them commission, why not NPCI ?
    Instead of Lotteries, long term planning should include discounts for cashless transactions and encouraging petty shops to advice, accept and receive commission on such transactions.
    Fear is that the Govt after promoting Cashless transactions in large scale may levy Graha laksmi cess on such transactions.

  • I pay bills for utilities through Smart Pay facility of HDFC Bank. The money is debited to my credit card. Is this mode of payment considered Digital & my payments will qualify for winning the rewards?

  • Steps in the Right Direction

    If following news reports are any indication , it will be a matter of only a FEW WEEKS , before the Government launches a UPI / AEPS based , Mobile Wallet App , that enables completion of a DIGITAL PAYMENT TRANSACTION , suggested in my above listed emails, as follows :

    * Both , the BUYER and the SELLER , " JUST PEER " into the camera of a Smart phone (
    kept on sale counter ) , to identify themselves biometrically and linking with their
    respective bank accounts
    * Seller " SPEAKS OUT " , into the phone , the PAYMENT AMOUNT for the purchase
    * Buyer " SPEAKS OUT " into the phone , the PAYMENT INSTRUCTIONS
    * Payment Amount gets transferred , from the BUYER's Bank Account to the SELLER's bank
    account ( with confirmation messages flashing on the counter based mobile )
    All the " speaking " ( asking for payment / giving payment instructions ) can be in any Indian Language ( in course of time biometrics of Voice Recognition , to be added )


    This SIMPLE , 3 STEP process , which requires nothing more than the EYEs and VOICEs of the Buyer and the Seller , is the ONLY WAY , our country can become a LESS CASH economy within 6 months , by getting rid of all other complicated methods !

    Google Action / Google Translate / Google Talk / UPI / AEPS

    10 % of tax ( GST in future ) to be automatically transferred to BUYER's DPF ( Digital Provident Fund ) account ( see my email : Digital Provident Fund ; An Unparallel Opportunity

    GST ( or VAT ) will be transferred to appropriate Government , immediately / automatically
    Records of ALL digital transactions will become available to IT / ED / Finance Ministry
    800 Million citizens will get a " Old Age Social Security " , without depending upon Govt
    ( Source : Times of India / 17 Dec 2016 )
    " Your thumb could soon be all the documentation required to enter an airport. And once the government is able to achieve this the second phase could see you flashing your thumb to board the aircraft, at least for domestic flights.
    While it may sound as science fiction, the aviation ministry has already started work on the first part and Hyderabad airport has successfully completed a pilot project on using biometric identification for allowing entry into the terminal there.

    "Over a billion (100 crore) Aadhar cards have been issued so far. At the time of issuing these cards, biometrics, fingerprints and iris scans, are taken and fed into a national digital registry. Presently, air travelers have to show their air ticket and a valid identity card to enter airports.

    We are examining the technical feasibility of asking people to give their Aadhar card numbers at the time of booking tickets. At airports, they can press their thumb for biometric identification; enter terminals and board domestic flights ( for international passports will be needed )," said a senior aviation ministry official.
    Ravi Shankar Prasad to Push for Transactions Via Aadhaar Cards
    ( Eco Times / 17 Dec 2016 )
    Further accelerating efforts towards digital payments, Union minister for electronics and IT Ravi Shankar Prasad said that transactions through the Aadhaar card will be promoted...

    “ Of the total 112 crore bank accounts, around 40 crore are already linked to Aadhaar card,“ he said. Prasad added that Aadhaar-based payments can be an all-pervasive way of digital transactions since it doesn't require everyone to have a smartphone.

    “ All people need, is to remember their Aadhaar number and authenticate themselves through their biometrics.
    The merchants will not need to invest in any expensive sophisticated technology for this -all they need is a small finger print reader that can be attached to any smartphone. Currently , these devices cost anywhere between `1500/2,000, but as the volumes grow, their cost will also drop.“


    ET had reported on Friday that the government plans to roll out a payment system that will allow customers to pay for fuel by simply pressing their fingers on an Aadhaar-verifying device, which would trigger the transfer of money from their bank accounts to the filling station.



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