All Govt. Transactions above Rs 5000 Would Be Made Via e-Payments: Cashless Push

All Govt. Transactions above Rs 5000 Would Be Made Via e-Payments: Cashless Push
By Admin 7 years ago

All Govt. Transactions above Rs 5000 Would Be Made Via e-Payments: Cashless Push

Finance Ministry on Monday has issued directives to all ministries and government departments to make e-payments to suppliers, contractors, and grantee and for other purposes.

One of the 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, and vendors who receive payments from the Govt. for various tasks.

The order is mentioned in a memo issued by expenditure department on Monday with the approval by Finance Minister, stating that all ministries have been asked to use e-payment facilities to pay all suppliers where the dues are more than Rs 5,000. The order came to achieve the goal of complete digitization of government payments.

Following the announcement of demonetisation of 500 and 1,000 rupee notes on November 8, the government has been taking a slew of measures to promote digital transactions.

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 have been decided as the threshold for Govt. transactions.

Cashless Govt Transactions: How Will It Help?

Govt. of India is a huge spender; in fact, they are the biggest spenders in India, if we include defence 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.

 

Govt. new cashless move,Demonetisation move, e-Payments for transactions,Finance Ministry