A committee, headed by former finance secretary Ratan Watal set up to convert government-citizen transactions to digital platform, has suggested a 30-90 days’ timeline for implementing a number of measures that it hopes can cut in half India’s cash usage from 12% of GDP in three years. If the government accepts the proposal of the panel then citizens may possibly be charged for cash usage, however it will also smooth the transactions as people can make the payments easily using mobiles and Aadhaar-based systems.
The committee in its recommendation has said that the situation needs to be reviewed from the perspective of an ordinary Indian - Why Digital? For all its inefficiencies, cash offers instant settlement, 24x7 up-time, familiarity and an illusion of zero transaction cost. The committee has recommended an independent mechanism within the overall central banking structure and amendments in the payments and settlement laws and disincentive for cash usage among host of other measures to help shift towards a less cash society.
Watal committee called for inter-operable payments between bank and non-banks as well as within non-banks and pitched for greater use of Aadhaar and mobile numbers for making digital payments as easy as cash. As the government has been pitching for a less-cash economy after it demonetised old Rs 500 and Rs 1,000 notes on November 8, keeping this in mind the committee has suggested, operations of payment systems like Real Time Gross Settlement (RTGS) and National Electronic Fund Transafer (NEFT) could be outsourced after a cost benefit analysis and these payment systems should be upgraded to 24x7 in due course of time.