Demonetisation Week-5 | Finance Minister announces slew of measures to promote digital payments
A month after Rs 500 and Rs 1000 notes were demonetised, Union Finance Minister Arun Jaitley on Thursday announced a slew of measures to promote the use of digital payments.
The Finance Ministry announced a total of eleven measures, which it described in detail in a statement released today.
Petrol, diesel purchases
At a press conference held here, Arun Jaitley announced a 0.75 per cent discount on purchases of petrol and diesel (at Central Government Petroleum PSUs) using credit or debit cards, e-wallets and mobile wallets.
Jaitley explained that the government is targeting at least 70 per cent of daily sales to be through cards or e-wallets or mobile wallets, to reduce cash exchange at petrol pumps by nearly Rs 2 lakh crore annually.
On whether such discounts will be provided by the private sector, he said, “it is PSUs which have taken this decision, the private sector has to decide in the world of competition. They are free to sell costlier petrol and face the consequences of the market.”
Incentives for rail passengers
People buying monthly or seasonal tickets in suburban railway networks through digital modes will get a 0.5 per cent discount, Jaitley added.
This measure, he said, will be effective from January 1 next year, and the Mumbai suburban railways will be the first to implement it.
He added that passengers who book railway tickets online will receive accidental insurance cover worth Rs 10 lakh, and that the Railways will provide a discount of 5% on digital payments for railway catering, accommodation, and retiring rooms.
58 per cent out of the nearly 14 lakh railway tickets purchased everyday are bought online. The discount offered now is expected to add another 20 per cent passengers to digital payment methods, Jaitley explained.
“Hence nearly 11 lakh passengers per day will be covered under the accidental insurance scheme,” he said.
Public dealings with govt departments, PSUs
Public dealings with (central) government departments and PSUs through digital mode will be free of transaction fees and Merchant Discount Rate (MDR) charges, the Finance Minister added.
State Governments, on their part, are being advised that they – and their organisations – should also consider absorbing transaction fees and MDR charges related to digital payments made to them, a Finance Ministry statement said today.
Meanwhile, Public Sector Banks will ensure that merchants don’t need to pay more than Rs. 100 per month as monthly rental for Point of Sale terminals, micro ATMs, and mobile Point(s) of Sales, the ministry said.
In addition, public sector insurance companies will “provide incentive(s), by way of discount or credit, upto 10% of the premium in general insurance policies and 8% in new life policies of Life Insurance Corporation sold through the customer portals, in case payment is made through digital means,” it added.
RuPay Kisan cards, Point of Sale machines for villagers; discounts on RFID, Fast Tag payments
Arun Jaitley today announced that 4.32 crore villagers who have Kisan credit cards will be issued ‘RuPay Kisan cards’ by the National Bank for Agriculture and Rural Development.
In addition, two point-of-sale machines will be provided to every village with a population of upto 10 lakh, and 1 lakh villages will be selected for this scheme.
The machines “are intended to be deployed at primary cooperative societies, milk societies or agricultural input dealers to facilitate agri-related transactions through digital means,” the Finance Ministry statement said.
This will benefit farmers of one lakh village covering a total population of nearly 75 crore, it added.
Finally, a 10 per cent discount will be provided on payments made using RFID or Fast Tags for at Toll Plazas on national highways. This measure will be effective till the end of March 2017, PTI reported.
In addition to these measures, it was announced earlier today that credit and debit card transactions worth up to Rs 2,000 will be exempt from service tax.
Against the backdrop of demonetisation, the Centre is aggressively promoting digital mode of payments to make the economy becomes less dependent on cash transactions.
“As of November 8 excessive amount of cash and a very very limited amount of digital transaction. There is a cost of transacting in cash and that cost of transacting in cash has to be borne by the economy, it is also be to borne by the political system,” Arun Jaitley said today.
“These are costs which are visible, there are cost(s) which are invisible. Excessive cash can also lead a lot of malpractices and therefore in the long run we are using this also as an opportunity to move towards digitisation,” he said.