Finance Minister Nirmala Sitharaman on Monday proposes a Rs,1,500 crore-scheme that will provide financial incentives to promote digital payments in the country. According to the minister, there has been a significant increase in digital payments made in the recent past and the scheme will boost the transactions going forward.
“To give a further boost to digital transactions, I earmark Rs 1,500 crore for a proposed scheme that will provide financial incentive to promote digital mode of payment,” Sitharaman said during the Budget presentation. The incentive may give a boost to the digital payments ecosystem in India which is dominated by the likes of Google Pay, Walmart-owned PhonePe, Paytm, amongst others.
According to a report by RBI growth in digital payments has been quite rapid with 43 per cent compounded annual growth rate (CAGR) in the last ten years. The report highlighted that 498 crore transactions accounting for Rs 96 lakh crore were recorded in FY 2010-11. This has now grown to 1623 crore transactions having a value of Rs 3,435 lakh crore in FY20. RBI said that people have accepted digital payments and this growth has been exponential over the years.
President Ram Nath Kovind last week during the joint sitting of Parliament of the Budget session said that over Rs 4 lakh crore worth of digital transactions were facilitated by UPI in December 2020 and more than 200 banks are linked to the UPI system.
To encourage digital payments in the country, Sitharaman in her 2019-20 Budget Speech had said digital payment options such as BHIM, BHIM UPI, UPI-QR Code, Aadhar Pay among others can be used for promoting a cashless economy.
She had also said that companies having an annual turnover of more than Rs 50 crore can offer these payment options to their customers, and no Merchant Discount Rate (MDR) would be levied on them or their customers.