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बेसिक इंग्लिश का दूसरा सत्र (कक्षा प्रारंभ : 22 अक्तूबर, शाम 3:30 से 5:30)
Q. Modernise Payment systems: Discuss the need to reform institution to modernise the payment systems in India.
Dec 15, 2016 Related to : GS Paper-3

Ans :


The central government is planning to amend the Payment of Wages Act, 1936, to mandate wage disbursal for industrial workers should be made through transfers to bank accounts or by cheque.  Making cashless payment system is good initiative, but it requires systemic changes that need to be in place, before making changes in wage act.


  • About 80% of India’s non-farm workforce falls into the unorganised or contract labour category. Their employment terms are often not fixed and many are hired through labour contractors.
  • Many of these workers do not have bank account and also not financially literate. They will find it to difficult if payment are made through banking channel.  
  • Many small and mid-size companies pay little tax, some do not possess tax identity numbers, for a variety of reasons. Given that, the bulk of payments are made through cash. 
  • There is need to fix tax administration, stop harassment, and strengthen banking and payment services networks before implementing cashless payments in industry.
  • Recent experience with demonetisation shows, this cashless’ payment scheme will require a comprehensive systemic changes that need to be in place, before the changes in law comes into effect. 


Making payments without usage of cash to industrial workers is very good idea, but it should be backed by a strong financial infrastructure. It needs systemic and comprehensive reforms in our institutions. Hence before implementing planned changes, government should build strong financial infrastructure. 

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