Asserting that digital transactions are only a “parallel mechanism” to cash transactions, Finance Minister Arun Jaitley on Thursday said that the former should not be seen as a “substitute for cash transactions”.

A cashless economy is actually a “less cash economy” as no economy can be fully cashless, Jaitley said in his opening remarks at the 5th meeting of consultative committee attached to Finance Ministry. The subject of today’s meeting was ‘Shift to Digital Transactions’.

Jaitley said that the government is trying to encourage digitisation because an excessively cash-dependent 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.

Jaitley said the government has given lot of incentives to the people to shift to digital mode of payment and the response has been quite positive.

The Finance Minister also said that the government and the RBI have taken various steps to bring down the cost of digital transactions.

He specifically mentioned about the merchant discount rate (MDR) charges which have been brought down significantly in case of transactions up to ₹2,000 made through debit cards i.e. 0.25 per cent in case of transactions below ₹1,000 and 0.50 per cent in case of transactions between ₹1,000 and to ₹2,000.

Jaitley mentioned that incentives announced by the government last week relating to discount of 0.75 per cent 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 per cent of the sale price to consumers on purchase of petrol/diesel if payment is made through digital means.

Jaitley said that today 55 per cent petrol pumps in the country are accepting payment in digital mode. After December 2, 2016 when the acceptance of old ₹500 notes was withdrawn at petrol pumps, 52 per cent of the payments are made by the digital mode.

He also said that the government is conscious of the need of the cyber security of high level to secure digital payments. He said the government and RBI are fully aware of cyber security challenges in the move and ensuring strong firewalls around the systems.

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