Govt to bear transactions costs on e-payments

To promote digital transactions, the Union Cabinet on Friday cleared the way for the government to bear the transaction cost of a merchant for payments made to it on all debit cards, BHIM UPI and Aadhaar enabled Payment System (AePS) transactions, provided the transactions are up to ₹2,000.

For two years starting January 1, the government will reimburse the transaction cost — also called merchant discount rate (MDR) — to banks. The Centre estimates that it will reimburse MDR of about ₹1,050 crore in 2018-19 and ₹1,462 crore in 2019-20, an official release said.

After this, the consumer and the merchant will not suffer any additional burden in the form of MDR. Such transactions account for a sizeable percentage of transaction volume, and will help to move towards a less-cash economy, the release said.

When a payment is made at a merchant point of sale, MDR is payable by the merchant to the bank. Citing this, many people make cash payments in spite of having debit cards.

Similarly, MDR is charged on payments made to merchants through BHIM UPI platform and AePS. By taking up the burden of MDR, the Centre hopes to see more people going for digital payments.

The release also added that a committee comprising the Secretary, Department of Financial Services, Secretary, Ministry of Electronics and Information Technology, and the CEO, National Payment Corporation of India (NPCI), will look into the industry cost structure of such transactions, which will form the basis to determine the levels of reimbursement.

The Cabinet also approved a special package for employment generation in the leather and footwear sector.

The package involves the implementation of the Central scheme, Indian Footwear, Leather & Accessories Development Programme, with an approved expenditure of ₹2,600 crore over three financial years from FY18. “The special package has the potential to generate 3.24 lakh new jobs in three years and assist in formalisation of two lakh jobs as cumulative impact in the footwear, leather and accessories sector,” an official release said.

The Cabinet Committee of Economic Affairs (CCEA) approved the second financial restructuring proposal of Konkan Railway Corporation Ltd, a Central public sector unit under the Railways. The move will increase the net worth of the company after implementation of the new accounting standard, IND AS.

The CCEA also approved capital investment subsidy of about ₹265 crore, to four industrial units located in North-Eastern region, including Sikkim.

The Union Cabinet on Friday also cleared the creation of a circle office of Commissioner of Metro Rail Safety CMRS, along with all supporting officers and staff, in the Commission of Railway Safety (CRS), which is under the Ministry of Civil Aviation.

The Cabinet gave its nod to National Ayush Mission from April 1, 2017 to March 31, 2020, with an outlay of ₹2,400 crore over the three-year period. The Mission, launched in September 2014, aims to build on India’s heritage represented by its ancient systems of medicine like Ayurveda, Sidhha, Unani and homeopathy.

An agreement between India and Colombia in agriculture and fisheries was also cleared.