By TIOL News Service

NEW DELHI, DEC 15, 2016: THE Union Finance Minister, Mr Arun Jaitley, chaired the Fifth Meeting of the Consultative Committee attached to the Ministry of Finance on the issue of "Digital Drive". The FM 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. The Finance Minister said that 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. He 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 regard. The Finance Minister Mr Jaitley was making his Opening Remarks at the 5th Meeting of the Consultative Committee attached to the Ministry of Finance. The subject of today's meeting was “Shift to Digital Transactions”.

Mr Jaitley further said that 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. 1000 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. 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 percent 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 After 2nd December, 2016 when the acceptance of old Rs. 500 notes was withdrawn at petrol pumps, 52% of the payments are made by the digital mode.

Keeping in mind that Indian consumer is cost conscious, the Finance Minister said that the Government is providing various incentives for digital transactions including debit card use. Regarding the availability of POS machines, the Finance Minister Mr 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. Earlier, a presentation detailing about various steps taken by Government so far to encourage digitization. Presentation also talked about various challenges inherent in this move e.g. possibility of cyber crime, low digital literacy and lack of infrastructure in remote areas. It also listed the steps taken to address these challenges e.g. promoting digital literacy at grass root level, extensive use of Business Correspondents and Gramin Dak Sevaks in rural areas both to deliver and create an awareness and sensitize people at large, and organisation of mock drills by CERT-IN which is India's nodal cyber security agency.