Centre’s Bhim vs Telangana’s Digital Wallet – A case of States’ entering currency policy?

No rewards for guessing who would win the battle between the two.  It is of course going to be Centre’s Bhim which will take over the TS wallet:

The Centre’s BHIM App and Aadhaar-based payments system have blocked the launch of the state’s own, TS-Wallet.

Chief Minister K. Chandrasekhar Rao had announced the launch of the of TS-Wallet — a mobile application for cashless transactions — in December last year. But bankers and service providers are said to be not particularly keen on partnering with individual state governments, after the Centre itself came out with the BHIM app and is now set to launch an Aadhaar-based payments system.

Bankers and service providers are also concerned about the security features of TS-Wallet, which was developed by the state’s IT department. The department had developed the app in December and had referred it to the government for final approval. There has been no progress after that.

The state government had even approached banks and service providers to form crucial partnerships while implementing the TS-Wallet system. But it was at this juncture, the Centre itself rolled out the BHIM App — which is the same at the state’s own digital payment solution.

“Bankers felt the TS-Wallet would be just a duplication of the BHIM App. Under TS-Wallet, we wanted waiver of all taxes and transaction charges. And banks had asked the government to bear some losses due to the waivers. We could not come out with a proposal on how much burden the government would bear due to which there was no progress on the TS-Wallet plan, official sources from the finance department revealed.

Though what is more interesting is all these digital payments are allowing Indian States to venture into the currency function, which was always the Centre’s function. As per Constitution, “Currency, coinage and legal tender; foreign exchange” is under the Union List (number 36 in the list).

But given how digital world is, it does not prevent State governments to offer their own digital wallets with some state related benefits/incentives  thrown in the scheme.  Unless there is a Constitutional amendment saying even digital currencies/payments will be a centre subject.

As the Centre tries to show its powers by rushing in the digital world, there are contrarian forces undermining (or atleast questioning) the very powers.

All this is so fascinating and ironical. It is taking us back to times when Princely State of Hyderabad issued its own currency. Whoever said this digital world is only about modernity is refusing to see how history is coming back…

 

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