Finance Minister Arun Jaitley on Thursday announced a raft of incentives to accelerate the switch from cash that include discounts for payments made digitally for fuel at petrol pumps, suburban railway services, insurance premiums, and for use of RFID at toll plazas on national highways.
Service tax, on digital transactions of up to Rs. 2,000, would also be waived, Mr. Jaitley told a press conference.
“In the month since the demonetisation announcement of November 8, we have seen a switchover to digital transactions to a large extent,” Mr. Jaitley said. “The government wants to speed this up.”
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The Centre is giving a push to alternative payment methods after its decision to withdraw high-denomination bank notes has triggered a shortage of cash that has impacted economic activity and livelihoods, particularly in the rural hinterland.
The RBI on December 7 cut its gross value-added growth projection for the year ending March 2017 by 50 basis points to 7.1 per cent, citing the currency withdrawal as a factor.
Digital payments for petrol and diesel at government-run petrol pumps will get a discount of 0.75 per cent, Mr. Jaitley announced, adding that it was up to the private sector companies to follow suit. The cost of the discounts will be borne by each relevant organisation, Mr. Jaitley said, adding there was no end date for these discounts. He did, however, say that each concerned department would decide the date on which the discount would roll out, although it would all take place “in a few days.”
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“4.5 crore customers buy petrol and diesel every day, and the daily sales amount works out to around Rs.1,800 crore,” he said. “In one month, the national average of digital payments among these has risen to 40 per cent from 20 per cent.”