Tax on cash transactions will make digital payments cost effective: Naidu

Naidu said govt may impose the tax above a threshold

Andhra Pradesh Chief Minister Chandrababu Naidu, who is heading a committee on boosting digital payments, tells Indivjal Dhasmana that he never did a flip-flop on demonetisation, but only put pressure on RBI and bankers to ease the sufferings of the common man after scrapping of Rs 500 and Rs 1,000 notes. Naidu, who submitted a report on digital payments to Prime Minister Narendra Modi, says digital payments have to be cost-effective vis-a-vis cash to encourage people to use them. Edited excerpts:

You are heading a committee on digitalisation formed after demonetisation. But, you did a flip-flop on demonetisation, criticising the Centre's move and also praising it later, didn't you?

No, that was not the case. I, in fact, put pressure on the Reserve Bank of India and banks. Immediately after demonetisation, the common man suffered and I wanted to reduce that suffering. I had expressed displeasure to the RBI and bankers for the way they were responding to the suffering. I was always inclined towards the (demonetisation) policy. The first statement supporting demonetisation was given by me. When I was in the opposition, I had raised the issue of demonetisation of high-value currency notes.

Has the suffering of the common man eased now?

Those pains were over in 60 days. Every day, I monitor. It's normal now.

Are you talking about Andhra Pradesh or the entire country?

These sufferings are over in Andhra Pradesh and more or less the situation has normalised in the country as well.

But, in a recent submission to the Public Accounts Committee (PAC), RBI governor Urjit Patel was learnt to have said that there are still cash problems in the rural areas?

There are some problems, but by and large, sufferings have been reduced.

You also stated that you would support reforms in political funding. What will you recommend to the government on this issue?

Demonetisation of old Rs 500 and 1,000 currency notes would itself acts towards these reforms. Distributing currencies in these high-value notes was very easy during elections. Now, it is difficult in small denomination notes. It is difficult to distribute the money through mobile currency, as it is traceable. Once political corruption is reduced, corruption in other spheres would also be reduced.

But, political parties need not disclose the source of funding up to Rs 20,000. Will you recommend these provisions in the Income Tax Act and the Representation of The People Act be amended?

I don't mind discussing these reforms with everyone.

Do you think demonetisation has succeeded in its prime objective of curbing the black money as much of the scrapped currencies has returned back to the banks than the anticipated amount?

You have to understand that demonetisation will curb generation of future black money. In future, all transactions will be done digitally, according to me. It is the best achievement.

What are the discounts and incentives you would recommend for promoting digitalisation after the finance ministry announced some?

Ours is a comprehensive report on digitalisation. For instance, your finger will act as a bank, it would be Aadhaar-based. A merchant having a smartphone needs only a biometric device that costs only Rs 2,000. The consumer need not have anything. He is to remember only his bank's name, Aadhaar number. He can go with Aadhaar authentication and do transactions.

Would you announce any further tax rebates , discounts or rebates to promote digitalisation?

We are making a clear recommendation that digital currency should be cost effective than cash currency. If physical currency is cost effective than digital currency, nobody would shift to the latter. We have to create that environment to promote digital transactions.

Will you recommend tax on cash transactions to promote digital transactions?

If necessary, we have to levy some tax above a threshold.

Do you see this to come up in the Budget?

Let us see how does the government respond.

You had asked for a special category status for Andhra Pradesh from the union government, instead a financial package came. Does it mean your demand was turned down by the Centre?

How does this matter if it is a financial package instead of the special status. All the benefits that I could have got from the special category status are being extended through financial package. That is why I have accepted that.

You made tremendous efforts to create Cyberabad which will go to Tenlangana. What kind of companies do you think would come and base in the proposed new capital ?

It will be a green field capital. Earlier I had built a brown field city Cyberabad. When IT sector came to Andhra Pradesh earlier, it was all body shopping. I kept on telling people that they should go for products. IT players may be there in the new capital, but a few ones. Now, there are some more areas like fintech, cyber security, data analytics, higher level of mathematical application. I am looking at them.

With Donald Trump administration focusing on US jobs, do you think that it would come in the way of your plans in Amaravati? 
There will be a drain of knowledge from America to Asia, that will be a gain for India. They will create a silicon valley in Andhra Pradesh. Americans will come to India for doing business. This is advantageous for us. Long back, Bill Gates told US government if you don't give H1-B visas, I will go to India and start my development centre, and I will change my headquarters.