THE HINDU Editorial Vocabulary-December 10, 2016- Topic 1
The government has declared an incentive
package to encourage non-cash payments for fuel, new insurance policies from public sector firms, train tickets
and highway toll, among other things. For credit and debit card transactions up
to Rs.2,000, the Reserve Bank of India has relaxed its stringent two-factor
authentication requirement, and service tax stands waived. Taken together,
these moves to encourage cashless payments are significant not just because
they can alleviate the cash crunch following the demonetisation of high-value
notes. They could spur a change in spending habits in an economy where cash has
served as the basis of around 95 per cent of all transactions. From those
between traders and farmers to settling a restaurant bill, the use of cash
creates a window to escape the tax net. Shopkeepers routinely ask buyers if
they would like a bill or not, and those who opt for the latter to save some
rupees are often left with little recourse if the goods prove to be substandard.
By contrast, cashless payments can be captured electronically through the
settlement mechanisms, bringing more revenue to the government and ensuring
consumer rights. Given India’s abysmal tax base, this nudge to cashless
payments could be a game-changer, with the introduction of the Goods and Services Tax.
A nudge to move people away from cash, especially in the rural economy,
first came in Yashwant Sinha’s 1998-99 Budget, with the issue of Kisan credit
cards to farmers. Around 15 years later, RuPay cards were introduced with an
eye on lowering payments to service providers such as Visa or Mastercard. By
November this year, 29 crore such cards had been issued, 19 crore of them
linked to Jan Dhan accounts. The Narendra Modi Cabinet approved a two-year action plan to encourage
digital and card payments this February. If some of the proposed measures, such as rationalising the
merchant discount rate on card transactions, had been implemented before the
demonetisation announcement, perhaps the current pain due to a tight supply of
cash could have been ameliorated somewhat. With new payments banks coming up,
along with mobile wallets and banking applications, India’s transaction
ecosystem could see a paradigm shift provided the government puts in place
effective monitoring systems and ensures interoperability between these
alternatives. An estimated Rs.18,000 crore is spent to maintain ATMs, and if
even a quarter of ATM withdrawals are cut by the switch to cashless payments,
banks could use the savings to reach the unbanked millions and still lower
digital transaction costs.
Vocabulary
Incentive: a thing that motivates or encourages one to do something.
Example: There is no incentive for customers to conserve water
Synonyms: inducement, motivation, motive, reason, stimulus, stimulant, spur
Stringent: of regulations, requirements, or conditions strict,
precise, and exacting.
Example: California's air pollution guidelines are stringent
Synonyms: strict, firm, rigid, rigorous, severe, harsh, tough, tight, exacting, demanding
Alleviate: make (suffering, deficiency, or a problem) less severe.
Example: He couldn't prevent her pain, only alleviate it
Synonyms: reduce, ease, relieve, take the edge off, deaden, dull, diminish
Spur: a thing that prompts or encourages someone; an incentive.
Example: Profit was both the spur and the reward of enterprise
Synonyms: stimulus, incentive, encouragement, inducement, impetus, prod
Captured: take into one's possession or control by force.
Example: The Russians captured 13,000 men
Synonyms: catch, apprehend, seize, arrest, take
captive, imprison
Abysmal: extremely bad; appalling.
Example: The quality of her work is abysmal
Synonyms: dreadful, awful, terrible, frightful, atrocious, disgraceful, deplorable
Nudge: a light touch or push.
Example: He gave her shoulder a nudge
Synonyms: poke, prod, jog, jab, push
Ameliorated: make something bad or
unsatisfactory better.
Example: The reform did much to ameliorate living standards
Synonyms: improve, make better, better, make improvements
to, enhance, help
Paradigm: a typical example or pattern of something; a model.
Example: There is a new paradigm for public art in this country
Synonyms: model, pattern, example, exemplar, template, standard, prototype
Unbanked: not served by a bank or similar financial institution.
Example:
We know from our own
research that there are still 250,000 people in the country who are unbanked