Telangana State hit by the demonetisation drive and the resultant cash crunch in the market, low volumes of business transactions and fall in commercial tax revenue in the last 10 days, however sees a silver lining to push for last mile banking.
Senior officials represented to the RBI to expedite the process for bringing rural sector into the ambit of cashless transactions and help the trade in the rural and urban areas move into system of cashless transactions.
“We, however, see this as a temporary crisis and we hope to tide over the situation,” they said. Once the money in circulation improves in two to three months, things will return to normalcy, they added on the eve of Chief Minister K.Chandrasekhar Rao’s visit to Delhi for a meeting with Prime Minister Modi.
Our focus will be to encourage people gradually shift to online banking, make payments through debit cards, credit cards or pay bills through mobile phone applications. This will translate into higher tax revenues eventually because of transparency in the system. “ We will have to be a little patient and facilitate reach of online banking to village level,” they said.
One positive feature of demonetisation, they said, is that bank deposits swelled to Rs.30,000 crore of which only 10 per cent is in circulation. The rise in bank deposits will help the State in getting institutional funding at lower interest rates to push its major infrastructure projects, they added.
Though certain sectors like excise and other service sectors were accepting old notes, revenue from liquor sales fell by 50 per cent, according to a liquor shop owner. VAT revenue declined steeply in the last 10 days. As against collection of about Rs.2,400 crore a month, so far only about Rs.200 crore was realised in more than two weeks.. The cash crunch has made people postpone their purchases or cut down their expenditure on non-essential goods.
