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E-payment can help Govt. save 
1 Lakh Crore per year
Wednesday, 03 November 2010, 18:21 IST |
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1,00,000 crore per year - enough to reduce its fiscal deficit by more than 20 percent, or boost its welfare spending by over 25 percent, or fund the entire cost of the Food Security Act - just by adopting the electronic payment method.
According to a report by global consultancy firm McKinsey, an electronic platform for government payments to and from individual households could save an estimated 1,00,000 crore.
E-payment will ensure that every poor household in India - around 80-100 million - will have unparalled access to secure and convenient benefits directly from the Government and without the interference of intermediaries.
The report titled 'Inclusive growth and financial security' further said that a nationwide e-payment system could theoretically pay for itself in just one year as the one-time cost of setting up a national e-payment infrastructure is just around 70,00 0 crore, while the model saves about 1,00,000 crore a year.
"A national e-payment system is a critical step in achieving India's long standing and fundamental goals of inclusive growth and financial security for its poor. The benefits to all stakeholders of a modern, reliable and well functioning payment platform are numerous and substantial," the report said.
A greater penetration of an e-payment set-up is likely to encourage greater participation from the rural poor citizens and bring the central government closer to its goal of reducing poverty and hunger through its welfare, food and housing subsidy schemes.
Electronic payment systems improve the efficacy of government services to the poor, provide improved efficiency in other government functions such as tax collection and maintain law and order and create new business opportunities by enabling the delivery of new products and services.
Source: PTI