Indian Finance Minister Arun Jaitley, on Thursday announced incentives ranging from 0.75 per cent to 10 on retail-purchase-of-products like petrol, diesel and insurance-products from state-run-companies to encourage digital, cashless-transactions.
Prime Minister Narendra Modi scrapped 500-rupee and 1,000-rupee banknotes on November 8 to flush out cash earned through illegal activities, or earned legally but never disclosed.
Citizens could redeem their money only by depositing it with banks, to be paid out over a period of time.
Since coming to power in 2014, Modi has pledged to crack down on so-called black money with new measures including 10-year jail terms for evaders.
“The incentive scheme has the potential of shifting at least 30 per cent more customers to digital means.
The earnings would further reduce the cash requirement of nearly two trillion rupees (29.69 billion dollars) a year at the petrol pumps,” Jaitley told reporters.
He said state-run insurance companies would offer discount of up to 10 per cent on payment of insurance premium through digital means.
Government officials are worried 90 per cent of the discontinued notes could yet come back into the financial-system, deposited in banks to be converted into valid-lower or new higher-denomination notes.
This would put a question mark on meeting Modi’s aim of flushing out untaxed money.
Indian banks have so far received nearly 12 trillion rupees in discounted currency since the government decided to abolish high value bank notes.
Opposition parties stalled the parliament for the 14th day on Thursday, seeking a probe into the mismanagement of supply of new currency to the public.