Cheque Ban Next On Modi’s Mind Even As Nation Struggles With Aftermath Of Demonetization & GST

The rumour of a proposal to ban cheque use for financial transactions is the latest worry for people given the trading community’s heavy dependence on these instruments. Media reports say a decision to this effect is likely to be announced any time soon as the government wants to give a further push to digitisation of the economy.

If the proposal turns out to be true, it would be a hastier decision than the GST rollout, say experts. The goods and services tax (GST) was rolled out from 1 July 2017 with a lot of fanfare amid concerns voiced over lack of dry runs on a large scale and absence of seamless internet connectivity and access across the nation. As a result, glitches galore that go beyond teething troubles.

After demonetization and GST, the government wants digital payments to be the norm. Nothing wrong in joining the ranks of Britain and Sweden. But are we ready? ask the financial experts. If we weren’t ready for GST, we are woefully ill-equipped for digitisation across the nation. The limited digital payments we have witnessed have been by and large confined to urban areas and the mode of mobile wallets used mainly in the daily food basket.

Rural folks brought into banking fold have been still hugging cash. Withdrawing from banks and ATMs and then paying the suppliers and shopkeepers remains the nation's preferred option. They have not yet started using cheques even for big payments. The government will be killing the cheque at its infancy in rural areas where its use is yet to become popular.

If at all the government wants to abolish cheque, it can start digital-payments-only regime in metropolitan cities on a pilot basis to prepare rural folks for the pace of digitization that is sweeping the world so that they too will embrace it in due course.

Putting the nation on notice is what Britain has done. High denomination notes were abolished at a 4-hour notice to catch crooks with their pants down. There was justification for the suddenness but it is unclear whether the exercise has paid off.

What the financial experts opine that stealth and haste should not mark the burial of cheque. Ideally it should be allowed to take roots across the nation before it is buried in the manner of slaughtering a fattened goat. Let India become an internet and Wi-Fi sweetspot like Sweden.

Unlike GST, there is no hurry this time around. GST was crying to be ushered in given the inequities and complications in the earlier system of indirect taxation. But universal digital payments can be a leisurely exercise. Everyone must be ready and taken into confidence.

People should be able to issue cheques and get drafts made from banks for purchases of properties. The government must be complimented for leading from the front and by example by steadfastly insisting on digital payments alone by government departments and government companies which is having a positive impact on large private sector companies as well.