Editorial

Digital cash

By Nagaland Post | Publish Date: 6/12/2019 12:43:37 PM IST

 With a brute majority of 303 MPs the BJP can go ahead with major decisions as it does not need to plead for support from its allies. With allies, the BJP-led NDA has a huge majority of 358 MPs. There are several major decisions that the NDA under Narendra Modi will be making and among which was the first regarding a push towards a digital economy. On Monday, the Modi government disclosed that it was contemplating on introducing a tax of 3-5 per cent on cash withdrawal of Rs 10 lakh in a year, a move to discourage cash usage in the economy and resultant black money. If the proposal is given the cabinet nod, then withdrawing a cumulative Rs 10 lakh a year can attract 3-5 per cent tax. This will be expected to be reflected in the first budget of the new government to keep track of high value cash deals and make digital payments mandatory. The move is to discourage cash usage and also to check resultant transaction of black money. It was learnt that discussions have been held internally on the fallout of such a move and the tax figure is still being discussed though it won’t be less than 5 per cent though 3-5 per cent is an appropriate figure. Earlier this week, the RBI moved towards clearing the desk by waiving the fee currently imposed on banks for using its NEFT/RTGS payment servers. The central government also said it was setting up a panel to review charges imposed by banks on ATM withdrawals. According to RBI sources, this was primarily aimed at boosting digital transactions. The move is not new since it the previous UPA government had imposed tax on withdrawals of more than Rs 50,000 from current accounts for detection of unaccounted money in the absence of alternative methods. The limit was sought to be increased to Rs.3 lakh by former finance minister Arun Jaitley in his budget proposals in 2017-18 but it was reverted to Rs.2 lakh and passed through an amendment to the Finance Bill 2017. After the controversial demonetisation in 2016, digital transactions had shown an increase by around 440%. This is not unexpected since the people had no option. The compulsions have translated into diversion from wallet to digital transactions. Reduced cash usage is expected to bring direct as well as indirect benefits. The direct costs of printing, maintaining and transporting currency amount to about 0.2 per cent of GDP and an increase of 5 per cent per year in cashless transactions will save more than Rs. 500 crore annually. Apart from reducing transaction costs (mainly the cost of withdrawing and processing currency notes) between two parties, going cashless is perhaps the most effective way of ensuring that a majority of households use the formal banking channels more effectively. This would promote greater financial transparency and literacy, and enable better targeting of households in welfare programmes with reduced leakage. However, it would be unrealistic to assume that mere ease of use will persuade millions of consumers to abandon cash transactions for online payments. As mobile payments have grown by leaps and bounds in the last five years, so have the instances of cyber-crime. This is a growing threat to digital transactions and the government cannot overlook this aspect if its efforts are to finally achieve the objective.

 

Launched on December 3,1990. Nagaland Post is the first and highest circulated newspaper of Nagaland state. Nagaland Post is also the first newspaper in Nagaland to be published in multi-colour.

Desk:+91-3862-248 489, e-mail: npdesk@gmail.com Fax: +91-3862-248 500
Advt.:+91-3862-248 267, e-mail:npostadvt@gmail.com

QUICK LINKS

SUNDAY POST

Join us on

© Nagaland Post 2018. All Rights are Reserved
Designed by : 4C Plus