Demonetisation effect: Why Telangana CM is working overtime to make state go cashless
Telangana chief minister K Chandrasekhara Rao is determined in backing demonetisation by setting an example.
To begin with he is to make the Siddipet Legislative Assembly constituency, represented by the state irrigation minister T Harish Rao, also his nephew, run on a cashless financial system, inspired by what is being done by a Gujarat village.
He is planning to introduce the mobile app TS Wallet which will be made available to all those are eager about cashless transactions, both government as well as private, across the state.
When Telangana was born on June 2, 2014 it started out as a revenue surplus state - the only other state was Gujarat. But to fulfil the plethora of poll promises that he made earlier, KCR pledged to implement schemes which cost more than what Telangana can raise as revenue, or get as its share from the devolution of funds from the central government.
He is, therefore, working on different models and streams to raise revenue including that which opens up by raising the number of districts from just 10 to 31 on the last Dasara day.
He needs it badly to fund numerous development and welfare schemes including the ambitious plan to build 2-BHK homes for the poor on which he proposes to spend Rs 5,000 crore.
This is prompting KCR to rope in competent officers in revenue generation departments even as he plugs for a cashless economy.
"If Telangana is to survive demonetisation it should become a cashless transaction state as soon as possible. Prime Minister Modi's decision is for a noble cause of curbing black money and should not be opposed blindly," emphasises the chief minister.
In pursuing his goal, the state has appointed a five-member task force of IAS officers soon after demonetisation was announced to recommend measures.
Based on its suggestions, the state has decided no cash will be accepted in all high value transactions in different departments including stamps and registrations and excise.
Telangana has around Rs 75,000 crores of cash in circulation and post demonetisation Rs 35,000 crore was deposited in banks while it supplied just Rs 12,500 crore in cash including the new Rs 2,000 notes leading to a severe cash crunch particularly of notes in smaller denominations.
"This huge demand supply gap has caused suffering and pain and the real impact of demonetisation will be felt in December," says KCR, allaying fears of any immediate problems in paying salaries to employees and pensions to former staff.
The chief minister has gone public with the decisions, after discussing it at a four hour long cabinet meeting on November 28, as part of a well thought out plan to secure the political future of the TRS.
The state's department of information technology is to launch a mobile app - TS Wallet - soon as part of its plan to help people shift to cashless transactions.
To ensure that it becomes popular swiftly he wants the Merchant Discount Rate on plastic money to be completely scrapped.
To implement TS Wallet effectively KCR wants the central government to share all data on Aadhar cardholders so that the state authorities can identify people who have and do not have bank accounts at the click of a mouse or a button.
The state is to help introduce swipe machines at all offices and install "Point of Sales" facilities.
But the low penetration of banks and internet may stall plans and the fact that 16.66 lakhs of the one crore households in the state have no formal schooling will pose a challenge.
In order to make Siddipet the first constituency with cashless transactions, KCR is drawing inspiration from the Akodara village of Gujarat with a population of 400 where only transactions of Rs 200 or less is done in cash.
In Siddipet, however, a person would be allowed to transact in cash up to Rs 500 while the rest is through various forms of the banking system.
It is a mix of urban and rural areas and he feels that it will be easy to implement digitisation there.
As part of the move, bank accounts would be opened for everyone in the constituency and RuPay cards given to all for financial transactions.
But KCR admits this will take time as there is shortage in the number of swiping machines to be supplied by the banks though he has set a December 31 deadline for the transformation.
According to him, since the central government's policy is to make the country move towards a cashless society, it would be prudent for all states to fall in line quickly.
"The sooner we facilitate this the better will be our revenues. Once the revenues are higher the government can even do away with income tax," explains KCR echoing the voice of the Modi government.
(Courtesy of Mail Today.)