Government statistics show that almost 1.6 million people were rewarded with cash – varying from Rs 1,000 to Rs 1 crore. Out of these, 1.38 million winners – or 87% of them – were RuPay debit card holders. On an average, the Modi government seems to have rewarded these RuPay debit card users holding a Jan Dhan account with almost Rs 1,100 each.
These rewards were given as part of the government’s ‘Lucky Grahak’ (lucky customer) scheme introduced post-demonetisation to accelerate the adoption of digital payment technologies. While Jan Dhan account holders seem to have been the biggest beneficiaries of the government’s cash rewards, others also got a share of the pie.
These cash rewards are in line with NITI Aayog’s action plan to incentivise people in a bid to wean them away from hoarding cash. The government’s think-tank had been especially keen on pushing RuPay debit cards and AEPS systems in various spheres. It had suggested setting up a fund to incentivise banks to setup infrastructure capable of handling AEPS and RuPay debit cards in rural and semi-urban areas. The NITI Aayog in its interim report on digital transactions earlier this year had noted, “In order to minimize the need for cash during the ensuing kharif season (March-April 2017), all the 150,000 fertiliser dealers and other input dealers should be ready to accept RuPay cards and Aadhaar biometric authentication based cashless payments from farmers for purchase of fertilizers and other inputs.” It had also suggested making all transactions at ration shops cashless through use of RuPay cards and Aadhar based payments by June 2017.
But have these cash rewards by the government managed to achieve what they sought out to in the first place? By the look of it, these cash rewards do not seem to have encouraged people to swipe their RuPay debit cards more. Infact ever since the government announced these cash rewards at the beginning of the year, there has been a gradual decline in the value of RuPay debit card transactions. Information available with the National Payments Corporation of India (NPCI) shows that RuPay card transactions have fallen by a third between January and April this year. The number of times people swiped these cards at machines have also fallen gradually. On the positive side, the Modi government can take heart from the fact that demonetisation has pushed more people into using RuPay cards and other payment systems more than ever. The value of RuPay transactions in April this year was almost equivalent to what people transacted in the whole of 2015-16.
Japan, for instance, enacted the Kodomo Teate Law in 2010 to stem the fall of its population. The law enacted by the then Yukio Hatayama government gave 13,000 Yen (almost Rs 7,500) every month to every parent with a child till the age of 15. Although there is been a marginal improvement in Japan’s birth rate since the time the law was enacted, for the first time in Japan’s history, the number of babies born will be fall below a million in 2017. Singapore too amended its Child Co-Development Savings Scheme in 2001 under which anyone having more than two children could get a maximum of S$8,000 (almost Rs 3.8 lakh). However, Singapore’s birth rate has been in freefall ever since the scheme was introduced. Earlier this year, China introduced a cash incentive for citizens to catch foreign spies on Chinese soil. The Beijing National Security Bureau offered 500,000 Yuan (almost Rs 50 lakh) to any Chinese who managed to net a foreigner spying on China. It is unclear whether anyone has been rewarded for spy-busting by the Chinese government so far.
While Modi may not want to throw a gauntlet at India’s avowed fiscal discipline targets through huge unproductive cash rewards, the coming few months could well reveal whether the ‘lucky Indian’ was rewarded enough to be weaned off his love for cash.