The government is planning to use Union Budget 2017-18 to take India closer to becoming cashless economy. Recent reports suggest that government may lower the threshold limit of Rs. 50,000 applicable on cash transactions. The revised limit is expected to be Rs. 30,000. In the last quarter of 2016, the government made a surprise move to devalue 86% of currency in the system. The cash crunch which followed it, left people scrambling to find cash. The situation has normalised now, and cash is easily available to the citizens. However, this has raised a new concern. The government is now worried that people might switch back to using cash for everything which defeats the purpose of the whole exercise. India cash-GDP ratio of 12% is the highest in the world which is a matter of concern for the nation. The government wants to bring it down to 6% in the next three years by de-incentivising cash transactions.
The government is planning to take several other steps to discourage cash transactions as well as promote digitisation. Along with lowering threshold limit to quote PAN for cash transactions government may also introduce cash handling charges in the budget for cash transactions above a certain limit. The threshold to quote PAN for merchant cash transactions which Rs. 2 lakhs presently, may be brought down to Rs. 1 lakh. The government has also changed the design of PAN card to make tampering more difficult. PAN card is held by 25 crore people in the country while 2.5 crores people apply for PAN card every year. To curb tampering, a new security feature called Quick Response Code has been added. It will help in the verification process by presenting all the details of cardholder in one go as and when the document is produced in front of any authority.
The government has already taken several measures to push the economy towards digitisation. It has built India Stack, which is a set of open APIs contributing towards digital infrastructure to facilitate cashless and paperless delivery of services through electronic verification, data transfer, digital lockers and more. The government has given several incentives on using digital wallets in the form of cash-back on making payments for various utilities such as petrol and daily dairy supplies.
Demonetisation witnessed a surge in digital wallets and payment banks which thrived on cash crunch grappling the economy. Paytm, the e-wallet service provider turned out to be one of the biggest gainers in its field. It claims to have 150 million users. Similarly, Airtel took advantage of the situation by launching payments bank service which got over 1 million enrolments during its testing phase. It claims that it will start its operations with 2,50,000 banking points across 29 states which will be greater than the total number of ATMs present in the country today.