The cash crunch being faced by people due to the demonetisation of high-value currency notes could be resolved by the middle or end of January 2017, with about Rs. 12 lakh crore in cash returning to the system by then, NITI Aayog CEO Amitabh Kant said on Friday.
Cess mooted
Mr. Kant also mooted an eventual move by the government to a transaction ecosystem where there is no cost associated with digital transactions and cash holdings could attract a cess.
Digital payments by debit or credit cards, for instance, attract a Merchant Discount Rate of 0.75 per cent to 1 per cent that has been waived as a temporary reprieve for cash-starved citizens.
“Around Rs. 3.5 trillion of the Rs. 17 trillion in circulation before demonetisation was pure black money and the increase in digital transactions will reduce the need for cash by about Rs. 2 trillion,” he said.
“So the economy needs Rs. 11-12 trillion in cash to finance normal transactions. This will be back in the system by mid-January or maybe the end of January.”
Separately, the government is working towards linking more and more bank accounts to Aadhaar as it looks to push UID-based payment systems, Electronics, Information Technology, Law and Justice Minister Ravi Shankar Prasad said.
Aadhaar to be pivot of payments
“We are going to promote an Aadhaar-enabled payment system (AEPS) in coordination with the Finance Ministry. About 40 crore bank accounts have been linked to Aadhaar,” Electronics, Information Technology, Law and Justice Minister Ravi Shankar Prasad said here on Friday.
Mr. Prasad said 99 per cent of the adult population had Aadhaar numbers at present, and moves were afoot to connect the rest of the bank accounts with the Aadhaar numbers.
Must requirement
The Minister said AEPS was required because around 30 crore people still did not have mobile/smartphones and could not do online transactions or use mobile wallets or e-wallets at any point in time. India had the digitisation infrastructure required to leverage the Jan Dhan-Aadhaar-Mobile (JAM) trinity, NITI Aayog CEO Amitabh Kant said in an address to the annual general meeting of industry body FICCI, stressing that if the country was to aspire to grow to a $10 trillion economy, it would have to be prepared for disruption.
Biggest disruptor
“Aadhaar-enabled payments are the biggest disruption in India,” Mr. Kant said.
“Nearly 30 crore people in India without mobile connections can use Aadhaar and thumb impression or iris scans for digital payments. In the next 6-7 months, every smartphone user will be able to make Aadhaar-based payments and even will allow each phone to act as an ATM using a device that can attach to the phone and scan fingerprints,” he said.
