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Last Updated : Dec 30, 2016 09:51 AM IST | Source: CNBC-TV18

Need more incentive to improve digital infra: Chandrababu Naidu

In an exclusive interview with CNBC-TV18, Chandrababu Naidu says that there has been a big jump in the use of mobile currency in Andhra Pradesh after the cash ban and the government is trying to introduce 1 lakh bio-metric devices by next year.


Supporter of the demonetisation move from the start, Andhra Pradesh Chief Minister Chandrababu Naidu says that the situation is improving due to increased circulation of Rs 500 and Rs 2,000 notes and the need to expand mobile currency is very important.


In an exclusive interview with CNBC-TV18, Naidu says that there has been a big jump in the use of mobile currency in Andhra Pradesh after the cash ban and the government is trying to introduce 1 lakh bio-metric devices by next year.

He further says the government needs to give more incentive to improve digital infrastructure and push the use of e-payment modes.

Below is the transcript of N Chandrababu Naidu's interview to CNBC-TV18's Shereen Bhan.

Q: Could I ask you to tell us what the situation on the ground is in the state of Andhra Pradesh? If you talk to chief ministers of Kerala, West Bengal, you talk to some of the Congress leaders, I would hope that beyond the political differences and political ideology what they are giving us is a true picture and they seem to believe that things have not really improved, that things continue to limp back to normalcy of some degree. What is the situation in your state?

A: In the beginning there was a big problem because of currency and also we were not prepared for digital economy. Today day by day situation is improving because of Rs 2000 and Rs 500 note and smaller denominations. However we had to managed very effectively. Simultaneously we had to go for mobile currency which is very important.

Even yesterday I had a meeting in Delhi, I discussed with chief ministers and also technology experts and we have arrived at three ways of going for mobile currency, one is, Aadhar Pay. For Aadhar Pay only one smartphone merchant should have and at the same time biometric device if you can attach, it will work as a micro ATM. Even consumer will have only Aadhar number and also bank name and automatically you can transact.

Second way even feature phone and also smartphone, we are having nearly 60 crore phones. USSD they have simplified the new version and it is very easy to transact.

Even UPI has a network as on today of 33 banks and also interoperability they have brought in. More than 103 banks they have synchronised Aadhar account.

Third way, swiping only card. Card maybe Jan Dhan card, RuPay card or Mastercard or Visa card, we need swiping machines, either ATM or micro ATM or e-PoS or m-PoS, these are all the machines we need and then automatically transactions can be done.

Q: The committee has decided that you will be importing at least e-PoS machines, 1.8 lakh m-PoS cost effective machines and I understand that this business of importing these machines will start in January 2017 but if I could ask you about the impact on the economy of the state, the impact as far as revenue is concerned because this has been one of the concerns raised by state finance ministers at the meeting of the GST council. Can you tell us whether you have seen job losses both in the formal as well as the informal sector especially in the construction sector, whether demonetisation has impacted your own infrastructure development plans for the state?

A: As of today there is some impact especially October effect is not there that much in November. December there is impact. January it may have some impact. How fast we can go for mobile currency is important issue here. What is economy? Somebody has to produce and somebody has to consume.

If nobody is consuming, nobody is producing, nobody is paying salaries, then there is a problem. Infrastructure or construction or any activity in small traders, everywhere that problem is there. However in Andhra Pradesh in one weeks time we are able to reach 25 percent mobile currency and that is a big quantum jump.

Q: I understand that you have an ambition to actually take Vijayawada cashless very shortly, how are you planning to do that, what is the timeline that you are working with?

A: This is very clear, I told you, mobile currency there is only three ways – aadhaar pay, mobile phone, and swiping. For all these things we need infrastructure. Wherever there is low hanging fruit, we want to tackle first. Everybody is having a Smartphone, even kirana shop owners. They need only biometric device; it is costing Rs 2,000. I am giving Rs 1,000 subsidy. We are getting machines within the country, even we are importing. Next month we are planning to put in the market nearly 1 lakh biometric devices. If I put 1 lakh biometric devices, 1 lakh shops, they can operate this; that is very easy.

Q: What is going to be the cost of all of this? Is there an estimate on the kind of cost that the government will incur whether it is the central government or the state government for the import of some of these machines whether it is the EPOS, MPOS or the biometric machines?

A: What I am saying -- simplest way, everybody is having Smartphone, Android phone. We have to add one biometric device; it is costing Rs 2,000. Rs 1,000 we are giving subsidy from government side. Suppose 1 lakh, it is costing nearly Rs 100 crore – we have to spend that amount of money then it will happen. That is how we are working in a big way.

Q: We have now got two big events coming up. We have got the Budget in the month of February, February 1, and then you have the possibility of the GST rollout. The government says it is still working with April 1. Let me start by asking you, do you believe April 1 2017 rollout for the GST is still doable or are you now realistically working with July 1 target?

A: I am preferring July 1 they have to rollout. Now everybody is waiting for that. Government of India has to bring some more consensus and then move forward. Second, even this committee on demonetisation, we are going to give interim report immediately with all these recommendations. Also, final report, it will take some more time but interim report we are very keen to give it to Prime Minister first week of January.

Q: What will that interim report essentially say, what would the action agenda be that you propose to the Prime Minister when you submit that report in the first week of January?

A: There are three ways of mobile currency. If you want to encourage mobile currency, digital currency cost of transaction should be lower than physical currency; that is the fundamental rule, then only people will move in that direction. Second, there is a big gap with hardware. Even MPOS, EPOS, Smartphone, Biometric device, all these things there is a problem. Third, backend from bank side, either servers or cloud or programming, software, they are having problems, that we have to address.

Communication, infrastructure, even there is a bandwidth problem; some areas we are having and some areas we don’t have, that we have to strengthen. Then ultimately we have to train people. Somebody is having cellphone, he is standing in queue for hours to draw money from ATM. He is unable to transact through mobile. The problem is very clear, it is attitude problem -- how to train, how to motivate them.

Q: So, give the constraints that we are dealing with and you articulated several of them on the infrastructure side, on the skills side, on the financial literacy side, when do you expect normalcy to return? The government is still hoping that the process of remonetisation will continue to gather pace but when do you expect normalcy to return all over India?

A: It all depends upon governments, bankers and RBI. If we can take proactive steps, give incentives for the traders and also digital transactions that is mobile currency, cost of mobile currency will be cost effective, then people are very intelligent, they will shift immediately.

Rs 500 and Rs 2000 notes are there but in rural area still there is a problem either for farmers or poor people, those who don't know how to operate also, these are the problems we are facing. So, better way is as far as possible we have to take mobile currency in urban areas to maximum extent. In rural areas for some more time some more cash you have to manage and then it will balance.

Q: Let me ask you about your expectations from the Budget because the hope is that this Budget in a sense is going to try and counter the negative impact of demonetisation, it will provide a stimulus to the economy. What would your Budget wish list be from the government?

A: Demonetisation in the long run is more advantageous for the nation. We can control corruption, we can control parallel economy, black money, we can improve efficiency also. With digital we can have advantage for the common man as financial inclusion, everything we can bring. However government of India and also state governments have to have incentives for infrastructure, hardware, financial literacy and how to do all these things in a fast manner is very important and that is what we are going to recommend in our report to the government of India.

Q: Let me end by asking you, we have heard from the Chief Minister of West Bengal, we have seen the Congress party saying that this has had a very negative impact as far as the rural economy is concerned, as far as the poor of the country is concerned. Do you believe that is an exaggeration, are you seeing distress at least in rural parts of Andhra Pradesh or do you believe that people in their attempt to try and support this move and we have seen resilience across India, do you believe there is an exaggerated picture of distress that is being presented by some political parties?

A: I want to appeal to everybody. Now, Rs 500, Rs 1,000 demonetisation is over. There is no way to bring back. Issue is how to go for digital economy and also how to overcome this crisis is very important. It is a major reform; naturally there is some problem in the initial stage. People are patiently waiting.

Also, if you see long queues, so much of time they are standing in queue but they are thinking for bright future they are suffering today, they are sacrificing today; that is the attitude of the people. However, in the beginning, over a period of time there is suffering. At the same time, they are taking the suffering also for a bright future tomorrow. That is where all of us have to deliver now.

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First Published on Dec 29, 2016 10:05 pm
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