CAIT urges Jaitley to promote digital payment

November 15, 2016 - India

In the wake of demonetisation of high-denomination notes in the Indian market, the Confederation of All India Traders (CAIT) has urged the Union finance minister Arun Jaitley to take steps to intensify adoption of electronic payments. It has also requested the government to ensure smooth flow of currency, both at the hands of traders and consumers.

Post demonetisation, consumer footfall in the market has declined in comparison to normal days. Besides retail activities, the wholesale trade has also been affected severely due to very low volume of transportation of goods. The trade in markets across the country has reduced to 25 per cent in comparison to normal days, CAIT said in a statement.

It is estimated that Indian retail trade is of about 42 lakh crore annually resulting to approximately Rs 14 thousand crore per day, out of which about 40 per cent trade is conducted through Business to Business (B2B) whereas rest of the 60 per cent trade is conducted through Business to Consumer (B2C) activities. The 60 per cent of the total retail trade is conducted in urban areas whereas rest of 40 per cent is conducted in rural areas.

Due to demonetisation move, rural retailers from taluka who generally visit nearby district markets for procurement of goods are forced to remain at their respective places for want of sufficient funds of acceptable denomination. Agricultural Produce Market Committee and mandis across the country also had very less business during the last few days as farmers who bring their produce for sale in the market are unable to get money due to non-availability of smaller denomination of notes. Further, the logistic sector came to standstill as the truck drivers had only high denomination notes which caused blocks in smooth movement of transportation.

Though demonetisation has prompted the usage of digital mode of payments, the transaction cost being charged by banks on its usage is a major deterrent in making payment through cards. As per guidelines of the ministry of finance released on February 29, 2016, incentives may be announced for every usage of card payments. Like special camps being organised for filing of IT returns, it will be appropriate if similar special camps may be organised in the markets with help of local trade associations for disbursement of currency, CAIT suggested to the finance minister.

Retailers who have direct connect with the consumers may also be authorised to accept high value denomination currency from the consumer, subject to necessary identification documents which in turn may be submitted to banks by the retailers for replacement of currency. Such a step will bring normalcy in the markets and will also off load banks from enormous pressure, CAIT said.

CAIT has also urged the government that it should consider waiver in import duties for point-of-sale (POS) terminals. There should also be a drive to ‘Make in India’ for POS and other mobile based payment acceptance technologies. In this regard it will also help to scale up significantly the broadband connectivity in small towns and rural areas to facilitate digital transactions. Better utilisation of existing payment infrastructure and acceptance network and a level playing field for free market and competition is the need of the hour for all stakeholders to come together and participate in this digital drive. The National Payment Council of India should be made an independent regulator, and a separate body for Rupay may be constituted for its greater penetration among the people. (RR)