Ever since Modi government came to power, one of the major aims of the government has been to make India a cashless economy. Demonetization, Unified Payments Interface, Digital India were steps in this direction. This was done for the reason that hoarding of black money and tax evasion by huge populace would be checked if the country becomes cashless economy. The promotion of cashless economy shall continue in the second term of Modi government as reflected in Finance Minister Nirmala Sitharaman’s budget speech.
The Finance minister announced that there will be no charges on digital transactions. To promote digital payments and discourage cash transactions, a 2 percent tax will be levied on cash withdrawal exceeding 1 crore rupees in a year from a single bank account. “To promote digital payments further, I propose to take a slew of measures. To discourage the practice of making business payments in cash, I propose to levy TDS (tax deducted at source) of 2 per cent on cash withdrawal exceeding Rs 1 crore in a year from a bank account,” said FM in budget speech.
“Business establishments with an annual turnover of Rs 50 crore would have to provide digital payment modes to customers at no extra charges or merchant discounts, on either customers or merchants,” said Sitharaman. “The Reserve Bank of India (RBI) and the government will cover the costs from savings accrued via a decrease in cash transaction operations,” she added. The aim is promote a cashless economy and will provide a boost to digital payment platforms.
The total number of transactions through United Payments Interface (UPI) is setting a record every month. As per the data from National Payments Corporation of India (NPCI), the total number of transactions in the month of December touched 620.17 million (Approx 62 crore) which is 18 percent more than 524.94 million (52 crore) in the previous month. The total transactions done through digital payments in the month of December translate into more than 2 crore transactions per day. The amount transacted in December was worth Rs 1 lakh crore in comparison to Rs 82 thousand crore in previous month. On average Rs 3 thousand crore per day was transacted through UPI in the month of December. The push for UPI transaction by global players like Whatsapp Pay, and Google Pay is expected to propel the growth in volume as well as the amount.
Digital payments have increased nine-fold in the last five years as pointed by RBI governor Shaktikanta Das. Modi government’s push for a cashless economy is reaping encouraging results and a persistent push, as was evident in the 2019 budget speech, shall ensure formalisation of transactions curbing corruption and the use of black money.