Incentives to Government Departments for Cash-Less
By: Amit Bhushan Date: 5th Dec. 2016
With the government drive for Cash-less not having much impact, the government is resorting to incentive scheme for staff to promote Cash-less transactions, at least that’s what media would like to convey. It has there by abdicated its role of policy formulation and given the lead to operational functionaries to innovate at the ground level. This now depends upon the comfort of bureaucrats on where they may want to automate payment and how? While such incentive may not be a bad idea, however the planning department has failed to come out with policy directions on its own to cover a large swath of population and sectors to usher cash-less. This would generally lead to gaps in coverage of people embracing cash-less for even some of the transactions and this would ensure that the myths around cash-less stay and hinder embracing of new technologies by common folks. Any such move to cash-less has to be driven by a government keen to plug leakages in tax collection and therefore it should ensure a wider adoption of Cash-less through suitable incentives and dis-incentives. It should also ensure that people trying to open accounts in their late attempt to go cash-less are absorbed suitably within the banking and other cash-less support system otherwise which the move may get diluted rather than achieving success for anyone.
What the planning department could have done is to have some policy guidelines for cash-less for a larger swathes. This can be for areas like logistics especially travel by State Transport buses which are used for commutation by huge swathes of population. A clear direction to offer cash-less ticketing in six month time-frame by all utility for own as well as license operators would perhaps go a long way. An incentive structure could be built by levying tax on Ticket purchase with complete waiver if the same is paid by Cash-less means and this may start at the end of six months. Next could be all schools and charitable bodies as well as political parties getting all their money for principle activities as well as all associated activities be paid by cash-less means only other-wise which a service tax or charge applied to such collections besides making it mandatory to give explanation for such act to parents and authorities. Any cash deposits to their banks for such organizations would need to be explained to authorities and ensure a collection point for tax on the same. These two acts will ensure that the cash-less movement has incentive with people and that a large number of them embrace technology in relatively short period. Once people get on the band-wagon of cash-less and experience ease including possible benefits, they may start clamour for cash-less in other walks of life as well but since these may be less organized the penetration may take time and incentives to government officials as proposed, might help.
By overlooking at such measures as the two examples, how-so-ever drastic or radical they sound, the planning body might be relying on innovation of the bureaucrats alone. Any large moves must ensure coverage of 60-70 percentage of population through centralized measures and leaving other innovations to bureaucrats and private entrepreneurs. While encouraging bureaucrats may ensure help, however it may be noted that is only for some of the areas are identified for payment automation. And that bureaucrats may not be keen to automate those areas where they have incentives for not to automate. What therefore may work is large scale adoption of cash-less that requires that most used necessities of common man are automated (for cash-less payment) via a centralized planning and push. Once this is done than people themselves start questioning why the other areas which may not be such necessities have been left out from ambit of payment automation. A compelling factor for adoption of Cash-less payment infrastructure would therefore become a political necessity otherwise which there would be brickbats. Also large scale compulsions lead to transcend of knowledge & permeation of skills much faster. In present form, most necessities may be running on cash while those areas which may not be necessities might be seeking cash-less payments, definitely not creating a demand from people and any hassles hereunder might lead to more complaints only. Also Cash-less drive should ensure that the necessary cash is available rather smothered as the cash based economy was also based on some previous government planning and for this purpose easing out supply of new cash should be an option to be considered wherever necessary. The leadership in government having committed to pay the political price in the short term will need to ensure that it gets enough firepower in the medium to long term especially when people are deciding to browbeat their way through innovation of investing in agri non-perishable to Bricks (which is labour intensive and workers are paid in cash) to other similar storables. While supply side push for bank accounts is already there a demand side push for the bank accounts whereby which such people start paying through their bank account might just help correct the eco-system a bit towards the compliant economy which is being promised.