Will govt take measures to upgrade digital infra in Budget 2018?
Transactions through digital means rose 6.05% to 1.06 billion in December 2017 from 997.1 million in November.
As the government move after demonetisation has been very obvious to make India a cashless economy, the last full Budget of the Modi dispensation is expected to come out with reforms roadmap in this direction, especially in digital transactions.
According to RBI's latest data, transaction through digital digital means rose 6.05% to 1.06 billion in December 2017, from 997.1 million in November. This is the first time that the transaction volume has crossed 1 billion mark.
In value terms, these transactions were worth Rs 12.55 lakh crore by end of December 2017-- the second highest performance in a year. Last time, digital transactions at high-levels were in March 2017 at Rs 14.96 lakh crore.
RBI’s data takes into account transactions made through credit and debit cards, the unified payments interface (UPI), unstructured supplementary service data (USSD), prepaid payment instruments (PPIs) and internet banking.
Ravi B Goyal, Chairman & Managing Director, AGS Transact Technologies Limited, said, “The last few quarters have been transformational for the FinTech and Banking Payments Services industry in terms of increased governmental policy push such as Aadhar pay, UPI and others.”
According to the RBI’s data, UPI has grown by over 7000% since inception in volume terms. During December 2017, UPI peaked to 145.5 million in volume terms valuing at Rs 13,140 crore - up 40% from 104.8 million in volume totalling up to Rs 9,640 crore in the previous month.
Goyal said, “These policy initiatives have not merely encouraged consumers onto digital platforms but has also promote financial inclusion. However, it would be appropriate to point out that cash would still co-exists along with increased push towards digitization.”
As cash still continues to be the preferred mode for transactions, especially in semi-rural & rural areas, Goyal strongly believes that the government’s pro-business policies will usher in a new era of prosperity providing stimulus to cash and digital payments alike.
“As India’s leading end-to-end payment solutions provider, our ardent belief is that the ‘Make in India’ initiative holds huge potential for spurring economic upliftment of the people and enhancing national development,” Goyal said.
Sandipan Mitra, CEO of HungerBox, however, said, “As we have been witnessing, India is going through a digital revolution and would continue to see through this for the coming years. Technology Hardware is a primary necessity to enable this digital revolution. The current costs and regulatory hurdles hurt startups a lot, especially during the early years.”
Mitra suggests that government should provide relief to the customs duty on imports and the applicable taxes and easier regulatory measures, as it would be a very good step in helping startups to focus more on enabling the digital economy of the country.
According to HungerBox, they pay 18% import duty on the IoT device, referred to as the Vendor Terminal. In addition we pay another 18% GST tax on it (these are the multiple vendor terminals that are placed in the 75+ digital cafeterias we manage for clients).
“Import duties could be removed and taxes could ideally be in the low single digits. This will significantly boost our business,” Mitra added.
Another step to aid the digitization, as per HungerBox, would be to reduce the MDRs for the merchants even for the other mode of digital payments like Credit cards, Net banking, etc.
Furthermore, Goyal said, “the forthcoming budget should announce measures to upgrade digital infrastructure, especially with regards to the protection of data stored online so that consumer confidence is enhanced.”