Oil firms, railways to stump up Rs 2,425-crore cashless freebies
Offering free insurance to passengers to cost railways Rs 25.2 crore
 "A gas pump is seen hanging from the ceiling at a petrol station in Seoul. Photo: Reuters")
A gas pump is seen hanging from the ceiling at a petrol station in Seoul.<b> Photo: Reuters<b/>
If the sale of petrol and diesel becomes cashless, state-run oil companies will shoulder a yearly burden of Rs 2,400 crore because of the 0.75 per cent discount offered. The railways will bear Rs 25.2 crore for offering free insurance to passengers buying tickets online.
Sources said when Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation announced the rebate on Tuesday night, the government had not issued formal instructions to them.
Finance Minister Arun Jaitley had on December 8 announced a 0.75 per cent discount for cashless purchase of petrol and diesel. He did not say who would pay for it.
A finance ministry official said the central government would not absorb the discounts for cashless transactions and these would be borne by public sector insurance and oil companies and the railways.
"When you buy insurance online, you eliminate the agent. The amount you save can bear the cost of these discounts. The burden will be very small," the official said. The discounts are not temporary because the government wants to nudge people towards online transactions, according to another official. Petrol and diesel worth Rs 1,800 crore are bought daily in the country and 20 per cent is normally paid for by digital means. This share zoomed to 40 per cent in November and Rs 360 crore of transactions shifted to cashless methods.
“This (the discount) is likely to shift at least 30 per cent more customers to digital means, which will reduce the cash requirement by nearly Rs 200,000 crore a year at petrol pumps,” the official added. Of the 53,000 petrol pumps fed by state-run oil companies, only 30,000 have card swiping machines. The oil companies have sought over 23,000 machines from banks in an effort to go completely digital. “Due to a rise in crude oil prices, diesel is likely to become dearer by Rs 1.4 a litre and petrol by Rs 1.6 a litre. Oil companies are likely to adjust the losses from the cashless drive against these hikes,” said a Mumbai-based analyst who did not wish to be named.
Indian Railway Catering and Tourism Corporation may have to spend Rs 25.2 crore to provide free insurance to customers who buy tickets online. “For the time being, IRCTC will absorb it. The cost will come to around 70 paise per ticket,” said a railway official.
The railway subsidiary may also have to absorb the 5 per cent discount for catering, accommodation and retiring rooms to customers paying online.
Sources said when Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation announced the rebate on Tuesday night, the government had not issued formal instructions to them.
Finance Minister Arun Jaitley had on December 8 announced a 0.75 per cent discount for cashless purchase of petrol and diesel. He did not say who would pay for it.
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A finance ministry official said the central government would not absorb the discounts for cashless transactions and these would be borne by public sector insurance and oil companies and the railways.
"When you buy insurance online, you eliminate the agent. The amount you save can bear the cost of these discounts. The burden will be very small," the official said. The discounts are not temporary because the government wants to nudge people towards online transactions, according to another official. Petrol and diesel worth Rs 1,800 crore are bought daily in the country and 20 per cent is normally paid for by digital means. This share zoomed to 40 per cent in November and Rs 360 crore of transactions shifted to cashless methods.
“This (the discount) is likely to shift at least 30 per cent more customers to digital means, which will reduce the cash requirement by nearly Rs 200,000 crore a year at petrol pumps,” the official added. Of the 53,000 petrol pumps fed by state-run oil companies, only 30,000 have card swiping machines. The oil companies have sought over 23,000 machines from banks in an effort to go completely digital. “Due to a rise in crude oil prices, diesel is likely to become dearer by Rs 1.4 a litre and petrol by Rs 1.6 a litre. Oil companies are likely to adjust the losses from the cashless drive against these hikes,” said a Mumbai-based analyst who did not wish to be named.
Indian Railway Catering and Tourism Corporation may have to spend Rs 25.2 crore to provide free insurance to customers who buy tickets online. “For the time being, IRCTC will absorb it. The cost will come to around 70 paise per ticket,” said a railway official.
The railway subsidiary may also have to absorb the 5 per cent discount for catering, accommodation and retiring rooms to customers paying online.
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First Published: Dec 14 2016 | 12:23 AM IST