Govt Seeks To Expand Non-Cash Payment Options To Support Digital Economy
The amount of money or banknotes in the economy is determined by the need to fulfil the demand for banknotes brought on by GDP growth, inflation, the need to renew dirty banknotes, and the expansion of non-cash payment methods
Nirmala Sitharaman, the finance minister on Monday said that as of 2 December 2022, the amount of currency in circulation (NiC) had increased by 7.98 per cent annually to reach Rs 31.92 lakh crore.
She stated in a response to the Lok Sabha that the demand for currency is influenced by a number of macroeconomic factors, including economic development and the level of interest rates.
She emphasised that the government’s goal is to transition away from a cash-based economy in order to lessen the production and circulation of black money and to support the digital economy.
According to her, the government and RBI have taken steps to support a less cash-dependent economy and boost digital payment.
The amount of money or banknotes in the economy is determined by the need to fulfil the demand for banknotes brought on by GDP growth, inflation, the need to renew dirty banknotes, and the expansion of non-cash payment methods.
When she was asked about the “Rationalisation of Merchant Discount Rates (MDR) for Debit Card Transactions,” she stated that the RBI had instructed banks not to impose MDR fees on their debit card clients.
The finance minister further stated that banks were asked by the Department of Revenue to stop collecting fees for any upcoming transactions carried out using the electronic channels listed in section 269SU of the Act. Additionally, the banks were instructed to quickly reimburse any fees associated with transactions made using these methods on or after 1 January 2020.
In a response to the House, Minister of State for Finance, Pankaj Chaudhary stated that because crypto assets are by definition borderless, international cooperation is required to avoid regulatory arbitrage.
Because of this, he stated that any regulation on the subject can only be effective with major international collaboration on appraisal of the risks, advantages and evolution of common taxonomy and standards.
He claimed that the Ministry of Finance currently oversees policy regarding crypto assets and the ecosystem that surrounds them.
In response to a different query, Chaudhary stated that at the moment, four stock exchanges—Multi Commodity Exchange of India (MCX), National Commodity and Derivatives Exchange (NCDEX), Bombay Stock Exchange (BSE), and National Stock Exchange of India (NSE)—have a segment dedicated to commodity derivatives.
According to him, the Consumer Food Price Inflation (CFPI) has decreased from 7.01 per cent in October 2022 to 4.67 per cent in November 2022. He also noted that the all-India average retail prices of pulses have not increased substantially.
According to Chaudhary in a different response, the country’s total Foreign Direct Investment (FDI) inflow grew from USD 81,973 million in FY21 to USD 84,835 million in FY22, which indicates there is more potential for foreign investment here.
He also said that the investors are welcomed by the government since it allows 100 per cent FDI in most sectors under the automatic route, excluding some sectors that have strategic importance.
The FDI Policy is regularly reviewed by the government to ensure that India continues to be a desirable and welcoming location for investors.
In an effort to limit gold imports, which are likely to lower the CAD, the government raised the customs levy on gold from 10.75 per cent to 15 per cent at the start of the present fiscal year.
Furthermore, the RBI has announced several measures to fund current account deficits and boost foreign exchange inflows.
