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Payments Policy direction from the Economic Survey 2016-17

There are key suggestions related to the approach to policy mentioned in the Economic Survey of India 2016-17 (pdf), released yesterday, and key among them is creating an incentive structure for digitisation of payments. But first, there was a significant change in approach: 1. The approach to digitisation: "In the medium term, the impetus provided to digitalization must continue. A few principles must guide this effort going forward. Digitalisation is not a panacea, nor is cash all bad. Public policy must balance benefits and costs of both forms of payments. Second, the transition to digitalisation must be gradual; take full account of the digitally deprived; respect rather than dictate choice, and be inclusive rather than controlled." It's as if someone writing this had read our post on issues with how India has approached technology policy, wherein it has been robbing people choice instead of giving them options. We had criticized the lack of an incremental approach to policy making, and the digital exclusion being created, which the Economic Survey appears to agree with when it says that policymaking should be inclusive and respect choice. 2. Incentive based approach: "Demonetisation was a potentially powerful stick which now needs carrots as complements"..."Above all, ensuring that demonetization indeed proves a catalyst for long-run changes in behavior will require measures to complement demonetisation with other non-punitive, incentive-compatible measures that reduce the incentives for tax evasion." 3. Government and RBI must bear the cost of digitisation: "To the extent that digitalisation must be incentivised-- and the…

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Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

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