Challenges remain amid govt's push for digital economy

Parliamentary panel has again summoned RBI governor Urjit Patel

As the central government pushes for a cashless economy, the Unique Identification Authority of India (UIDAI) says it's still a long way for an Aadhaar-enabled payment system (AEPS).

According to a note it has sent to Parliament's standing committee on finance, of around 480 million people who have linked Aadhaar, the citizen identification, to their bank accounts, only 25 mn have access to AEPS.

UIDAI says if all post offices, ration shops, offices of state electricity boards and the Centre's telephone network migrate to AEPS, there would be a little over 1.5 mn delivery points offering financial services.

The parliamentary panel, headed by the Congress' Veerappa Moily, has again summoned Reserve Bank governor Urjit Patel, for July 6. This is a sequel to his appearance before the committee on January 18, on the controversial demonetisation issue.

Later, the topic was expanded to 'demonetisation and transformation towards a digital economy', with the government saying the banning of Rs 500 and Rs 1,000 currency notes in early November 2016 was aimed at moving to a cashless economy. Earlier, it had said demonetisation was done to curb undisclosed money and fake currency, which in turn had fuelled cross-border terrorism.

Since then, panel members have expressed concern over safety and security of digital transactions, given the vulnerability of these platforms to hackers. To get a wider perspective on these and the challenge in moving to a digital economy, the standing committee has also summoned NITI Aayog chief executive Amitabh Kant and home ministry officials, for July 5.

Sources said the Aayog had prepared a report on the digital payments challenge. And, officials from various enforcement agencies, along with finance ministry and RBI officials, have prepared draft changes in the Payment and Settlement Systems Act.

The government is keen to push a digital payments system, despite the challenges as indicated by UIDAI, which has also listed the BHIM App as a success story. Around 15 mn persons have downloaded the App, launched on December 30, 2016, in five months. And, around 2.3 mn completed 13.4 mn financial transactions amounting to Rs 4,113 crore, says the background note from UIDAI to the parliamentary panel.

The ministry of electronics and information technology has set a target of Rs 2,500 crore in digital payment transactions over 2017-18. It has given targets to 17 ministries with high citizen touch points, beside 22 public and 16 private banks, to push a cashless economy.