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Government should bear complete transaction-charges on payment made through debit and credit cards for curbing currency circulation

It refers to RBI report released on 29.08.2019 revealing that there has been a shocking 18-percent rise in currency-circulation from that at time of demonetization of cold currency-notes of rupees 500 and 1000 on 08.11.2016 thus killing the very purpose of demonetization. This is because stress was given on small digital payments where there are regular cases of frauds affecting ordinary lower and middle income people. Currency-circulation can only be curbed by targeting bigger transactions. Rather than spending so much like rupees 4811 crores on currency-printing in the year 2017-18, study should be made if government and banks can bear complete transaction-charges on use of credit and debit cards. Presently traders having low profit-margins charge two-percent extra from consumers on payments made through credit and debit cards. Amount so spent on bearing transaction-charges partly by government can be further compensated by withdrawing needless cash-incentive of .75-percent on purchase of petrol and diesel through card-payment. Banks can be directed to reduce transaction-charges on card-payment considerably in case government is ready to bear balance nominal transaction-charges.

Cash-withdrawal limit from banks by an individual should be restored to that at time of demonetization i.e. rupees 96000 per month by an individual per month, which may gradually be further reduced to rupees 48000 per month. However for tackling economy-slowdown, on-line sale should be banned or restricted so that retail-wholesale trade contributing maximum 28-percent to Indian economy may flourish with transaction-less card-payments thus preventing generation of unemployment.

Currency-circulation can further be curbed by asking all rupees-2000 notes to be deposited in banks without being further issued. Step will not affect common people because rupees 2000-notes are mainly used for unaccounted big transactions. Government can generate huge revenue by simultaneously introducing permanent Voluntary Disclosure Scheme whereby 50-percent of unaccounted  money can be invested in long-term Infrastructural Bonds with nominal interest to generate new projects creating huge employment in public-sector rather than imposing surcharges on higher incomes paving towards evasion of Income Tax.

 

SUBHASH CHANDRA AGRAWAL

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