Earlier today, the Union Finance Minister Nirmala Sitharaman announced a scheme to boost digital payments in the country as part of her Union Budget 2021 announcements. The government has allocated a total of Rs 1,500 crores in a bid to boost digital payments within the country. The budget mentioned instances of financial incentives in order to boost the digital payment system, although exact details are yet to be cleared.
“To give a further boost to digital transactions, I earmark Rs 1,500 crore for a proposed scheme that will provide financial incentive to promote digital mode of payment,” said the Finance Minister in her speech. “…We have now worked out the modalities and the NRF outlay will be Rs 50,000 crore over five years. It will ensure the overall research ecosystem in the country is strengthened with focus on identified national priority thrust areas,” she added.
Digital Payments to get a huge boost in 2021
The digital payment system in India covers a wide variety of payment systems currently active. Some of the popular ways include net banking, UPI payment, and digital wallet-based payments. The UPI-based system could benefit from this decision the most as this is the one promoted by the government itself via its BHIM app.
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However, this contradicts the restrictions the NPCI made regarding UPI payments in India. Late last year, the National Payments Corporation of India (NPCI) announced that all third-party UPI services can only do up to 30 percent of transactions and they have to figure out a way to do so, starting January 1, 2021. Services such as Google Pay and PhonePe will have to cut down on the number of transactions, especially since they dominate the segment.
As part of the Union Budget 2021, the government also raised the customs duty on smartphone parts in a bid to boost domestic manufacturing. The new taxes will be applicable on components like charging adapters and several smartphone components. Hence, we could see an increase in smartphone prices again this year, unless smartphone brands decide to localize more of their manufacturing in India.
from Union Budget 2021 to boost digital payments in India: Here are all details
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