With the demonetization move, there is a huge paradigm shift from cash economy to cashless economy. With the initial implementation of things in a cashless economy, people were confused and were in a bit of worry and concern about how the cashless economy will function.
Mass population of India was confused in the sense that will the move towards a cashless economy will bring additional burden in the form of extra charges or will offer convenience, ease and tangible benefits?
The government offered varied incentives to provide a smooth path for the population to switch to the digital transactions. The cashless economy offers the ease of transacting in this digital eco-system promoted off lately. The digital transactions will enable the individual to keep track of its spending and enable them to manage their income budgets appropriately.
Insurance Premium Discounts in a cashless economy
The government recently announced various discounts on the digital transactions to create an ecosystem for the cashless economy. Such discounts were also offered on the insurance premium for making a digital premium payment for buying an insurance policy.
General Insurance: The general insurance comprises of health, motor, travel, home insurance policies. The government offered a 10% discount on insurance premiums for the general insurance policies bought online via public insurance companies which are Oriental Insurance company, New India Assurance Company, United India Insurance Company and National Insurance company.
However, the same kind of insurance premium discount is not offered for the online policies bought from private general insurance companies.
Life Insurance: The life insurance corporation of India (LIC) is the only state owned life insurance company in India. To push and promote the cashless economy, the government offered a 8% discount on the life insurance policies bought online through LIC’s website.
Private life insurance companies and other insurance intermediaries, however, believed that if the government would have offered a similar kind of insurance premium discount on the insurance policies bought online, there would have been a big boost to the insurance sector and push towards he cashless economy.
Other Discounts to promote Cashless Economy
Some other discounts offered by the government to promote cashless economy are the elimination of the service tax for the digital transactions up to Rs 2,000. On purchase of fuel through digital transactions or mobile wallets, the individual gets 0.75% discount. 0.5% discount on monthly and seasonal suburban railway tickets from 1 January 2017. 10% discount on NH toll payment via RFID or fast-tags in 2016-17.
Though for a country like India, it will take time for people to swap from the cash economy to cashless economy.With the kind of freebies and other incentives offered by the government, the cashless economy is expected to grow but not at a rapid speed rather at a sluggish stage initially.