As crime, corruption and graft thrive on the use of cash, Union Finance Minister Arun Jaitley on Saturday hoped the country would move from using less cash to eventually a cashless economy to benefit from digital transactions.
“As India is a cash using society with economic and social costs involved in excessive use of cash, its anonymity allows owners to risk while the state suffers due to tax non-compliance,” said Jaitley after unveiling 100 digital villages, 100 branches and 100 ATMs of state-run Vijaya Bank here.
Asserting that crime, corruption and terrorism flourish on cash, the Finance Minister said larger amounts of cash flowing into the economy had their own consequences.
“Technology is rapidly changing the banking sector, which soon will become a part of smartphones. Transforming into a developed economy would mean embracing cashless economy,” said Jaitley.
Recalling the impact of the November 8 demonetisation of higher currency, the Minister said banning Rs 1,000 and old Rs 500 notes had eliminated the anonymity of cash ownership and was taking the economy toward more digitisation.
“Demonetisation also helped to widen the tax base with more people coming into the formal economy from the informal sector,” reiterated Jaitley.
The Minister also hoped the Goods and Services Tax (GST) would expand the indirect tax base and eliminate cash dealings due to lack of benefit from input credit.
“The new tax regime will expand the base of indirect tax, as the possibility of cash dealings gets eliminated due to lack of benefit from input credit,” Jaitley pointed out.
The Minister also told the gathering that the central government and the Reserve Bank of India (RBI) had taken steps to adopt digital payments, and incentives were being given to the people for shifting to the digital mode.
“We have also reduced the cost of digital transactions to encourage people to use less cash and make payments digitally,” added Jaitley.