The common man will rejoice as the GST Council’s recent decision to award a cashback of 20 per cent for those paying GST through the digital platforms such as RuPay and BHIM. Not only does this ensure that more people are incentivised to pay tax but also allows for the fact that the government crackdown on corruption continues as using digital payments eliminates red tape and the middleman.  The government’s objective has received mass user support as statistics by the National Payments Corporation of India (NPCI) bear out. 

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The over 30 million downloads by the BHIM app this year and the  208 million transactions conducted by the RuPay card suggests an ease and familiarity with digital transactions which was certainly not the case with the average Indian before. What is also heartening to see is that this user base, though primarily directed at the economically backward, is also making its way towards the upwardly mobile who are eager to take advantage of the government’s latest scheme. And the fact that a number of major states in the country such as Uttar Pradesh, Bihar, Maharashtra and Gujarat, among others, are taking part in this endeavour suggests that Prime Minister Modi’s cashless platform may slowly be getting support across the country, a move that is only to be welcomed. There are hurdles though still to be crossed. With polls in Madhya Pradesh and Rajasthan not far away it is naive to believe that the move to encourage cashless payments will not be caught up in the crossfire of politics. 

The other point is that leaving aside cashless payments, GST itself is a sensitive issue. Cries of ‘populism’ and ‘electoral opportunism’ by the Opposition have already dogged the government as it slashed GST rates from 28% to 18% of over 100 items last month ensuring that some kind of consensus will be almost impossible to be arrived at. Finally, the effect of the government’s rate cut needs to be seen. While it is a bonanza for customers and retailers, there will be a shortfall of Rs 16,000 crore in tax revenue collection for the government. With the festive season coming up the government should be able to make up those numbers through increased consumer spending but till then it is a wait and see situation. These moves may sound alarming but the government’s confidence is based on the fact that economic growth has only increased. 

According to a recent report by Morgan Stanley, GDP growth was likely to increase to 7.5 per cent this fiscal from 6.7 per cent in 2017-18. According to the report, the growth was mainly due to a robust performance by the manufacturing and service sectors, a move that will only be further pushed by the government’s latest bid to kickstart demand. Also, the cashback option should help in pushing up tax compliance and possibly increasing tax revenues through involving a broader base of people. This will go a long way in addressing the issue of a shortfall in revenue. One has to wait and keep the faith. Despite challenges such as a weak monsoon and a hike in international oil prices, the Indian economy has remained one of the fastest growing economies in the world. We need to keep faith in the government’s initiatives as they have worked for India so far.