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SSC Selection Post 2024 PYQ — Question 4

SSC Selection Post - Higher Secondary Level - 20 Jun 2024 - Shift 2 • English • Q4

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Read the given passage and answer the questions that follow.
Seeking to move towards a cashless economy, the government has proposed income tax
benefits for people making payments through credit or debit cards, besides doing away with
transaction charges on the purchase of petrol, gas and rail tickets with plastic money. This is
the first serious effort to tackle the predominance of cash in India’s economy. India is a hugely
cash-dependent economy. The RBI and commercial banks annually spend around Rupees
21,000 crore in currency operations costs while the citizens of Delhi alone spend Rupees 9.1
crore and 60 lakh hours in collecting cash.

The scale of this burden is unique to India considering that it is among the most cash-
intensive economies with a cash-to-GDP ratio of 12%, almost four times as much as other markets such as Brazil (3.93%), Mexico (5.3%) and South Africa (3.73%). Moreover, cash
transactions and black money are directly linked, since a cash trail is nigh impossible to track.
As such, electronic transactions and the ease of audit they afford should make the
government’s job much easier in terms of curbing illegal transactions.
What the switchover to payments by credit and debit cards means is that the payer must have
money in the bank. This can be facilitated through a greater recourse to direct cash transfer of
subsidies to banks. But, those who avail of this may not belong to the section that pays
income tax. Given that less than three per cent of our population pays income tax,
transactions by plastic cards may not amount to much. But, the scene is changing. For
instance, payments by mobiles have grown from just 860 transactions in November 2010 to
4.4 million in August 2014. With the spread of Internet and expansion of e-commerce, online
payments are fast catching on among the middle class. These are mostly cashless
transactions. It is also necessary to remember that a move towards a cashless economy will
eliminate the cost of printing and distributing cash. If to these expenses are added the cost of
storage and maintaining the currencies in the over 60,000 ATMs, the outlay becomes
prohibitive. The answer is a buoyant economy that will reduce the numbers of those who still
regard cash as the only reliable legal tender.

How would e-transactions help the Government of India?

Show answer & explanation

Correct answer: B

Explanation

The correct answer is option 2 i.e. Curbing illegal transactions.

In the passage, the author highlights that "cash transactions and black money are directly linked, since a cash trail is nigh impossible to track." This suggests that the anonymity of cash transactions facilitates illegal activities. Conversely, electronic transactions provide an audit trail, making it easier for the government to monitor and regulate financial activities, thereby reducing the scope for illegal transactions.

Why the other options are incorrect:
Option 1: Increasing the audit work at government level – While e-transactions do require monitoring, they actually simplify audits by providing clear digital records, reducing the complexity of manual cash tracking.

Option 3: Increasing the paperwork of the government – E-transactions aim to reduce paperwork by automating processes and reducing the need for physical documentation.
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Option 4: Increasing the cash transportation charges at government level – The shift to e-transactions reduces the need for physical cash handling and transportation, thereby decreasing associated costs.