Cashless Push: All Govt. Transactions Above Rs 5000 Would Be Made Via e-Payments
The best way to set an example is by following it, and showing the world what it takes to implement an idea.
In one of the most strongest push for a cashless economy, Finance Ministry has ordered that all Govt. Departments will use e-Payments for transactions above Rs 5000. This will basically impact 60-70% of all Govt. transactions in the country, and introduce a newer level of transparency and bureaucracy never experienced before.
This order to go cashless covers all suppliers, contractors, vendors etc who receive payments from the Govt. for various tasks.
The official statement from the Finance Ministry said, “All the ministries and departments of the Government of India have been now directed by the Ministry of Finance to ensure with immediate effect that all payments above Rs 5,000 to suppliers, contractors, grantee and loanee institutions etc are made by issue of payment advises only,”
Earlier, the limit for cash transactions for Govt. spending was Rs 10,000.
Interestingly, we had reported last year that Govt. may lower this threshold, and there were speculations that all Govt. spending above Rs 1000 would be cashless. However, that didn’t happen during that time, and now, Rs 5000 has been decided as the threshold for Govt. transactions.
Cashless Govt Transactions: How Will It Help?
Govt. of India is huge spender, in fact, they are the biggest spenders in India, if we include defense deals, infrastructural projects and other activities.
For the year 2014-15, Govt. of India allocated a budget of Rs 17.94 lakh crore for spending on various projects, schemes and plans. More than 60% of this amount involves transactions above Rs 5000, and once it is cashless, then a lot of transparency will be automatically embedded into the system.
As the transactions would be entirely cashless, Govt. can track and record the payments with more efficiency, and the concept of bribes and commissions would also vanish, as the payments would be directly transferred to the beneficiary’s bank account.
Hence, eradication of corruption would be one the major accomplishments of this massive cashless drive.
Last month, Economic Affairs Secretary Shaktikanta Das had given a hint of this decision, when he had advised all Govt. officials to start using cashless mode for bringing in more transparency and for promoting cashless economy in the country.
Besides, Govt. is right now creating a massive web-portal for procurement of Govt. supplies, and once that happens, then 100% of all Govt. spending can be converted into cashless.
Will this plan to enforce cashless Govt. transactions work for India? Do share your views by commenting right here!