+91 9004418746enquiry.aashah@gmail.com
+91 9004078746aashahs.ias@gmail.com

10 January 2017 Editorial


10 January 2017

Oiling cashless wheels

The threat by petroleum retailers to stop accepting credit and debit card payments led to a late-night intervention by the Centre, with Dharmendra Pradhan, Minister for Petroleum, declaring that the protest action had been put off till January 13. Fuel dealers raised a red flag on the decision by certain banks to levy the merchant discount rate (MDR) of up to one per cent on card payments. After the demonetisation exercise began, the government had waived the service tax on the MDR surcharge from December 8 for card-based payments up to 2,000 and got banks to waive the MDR charges on debit cards till December 31, 2016. The Petroleum Minister has now said that neither the consumer nor the dealers, operating on thin margins, would bear the MDR for fuel refills even after January 13. Stakeholders, he said, will absorb the cost, but it is still not clear who will bear the cost of going cashless — banks are not out of line in expecting some revenue in return for facilitating transactions through point of sale (PoS) devices. Since November 8, public sector banks have been advised by the Centre to charge a maximum of 100 a month as PoS device rentals from small merchants, and the move has benefited 6.5 lakh of the 15 lakh PoS devices. Public sector oil marketers were asked to offer a 0.75 per cent discount to customers using non-cash means to tank up. The Railways, public sector insurers and others have been asked to offer discounts or charge lower rates for cashless transactions; so more such spats could occur, although the Centre has promised to foot the bill for some of these subventions.

Petroleum outlets are particularly important for a cash-lite economy push as they handle nearly 2 lakh crore of cash a year. Queues at banks have eased, but the weekly withdrawal limits haven’t been lifted. In a situation where people are cash-strapped and the government is nudging them towards alternatives, the uncertainty of the sort created at fuel pumps should be avoided as it could lead to a crisis of confidence. Last February the Cabinet had given the nod for rationalising MDR charges. An expert panel to recommend legislative and other changes was constituted in August and it mooted greater transparency in fees for digital payments, protection for private data of consumers, a mechanism to ensure they will not be liable to pay for unauthorised transactions or system errors, and the creation of a new payments regulator. To build confidence in a less-cash economy, people nudged into a new way of life need clarity and consistency in policy along with a visible road map to secure their confidence. Lucky draws alone won’t suffice.

A blow to reformists in Iran

The death of Ali Akbar Hashemi Rafsanjani, the former President of the Islamic Republic of Iran and powerful cleric who was widely considered a leading “moderate” in Iran’s polity, is a major blow to the reformists in the country. He had a complex and long tenure as a political leader, emerging as a revolutionary who participated in the overthrow of the Shah regime, heading Parliament in post-Revolution Iran and later being elected twice as President. He rebuilt an economy devastated in the near-decade-long war against Iraq. While in power, Rafsanjani promoted a liberal economic policy that moved Iran away from statism, pursued a realist foreign policy that sought to protect Iranian geopolitical interests and minimise tensions with the West. He was ruthless as an administrator, presiding over the suppression of dissent by arresting and executing several prominent liberals and leftists. Out of power, Rafsanjani was seen as a powerful moderate cleric with an array of business interests; he enjoyed the support of the bazaar, which acted as a buffer in the war of wits between the reformists and hardliners. In recent years reformists have sought to establish the rule of law and better relations with the West, while hardliners have emphasised the supremacy of theocracy and conservative values, flowing from the guardianship of the clerics who led the revolution.

In this milieu, Rafsanjani threw in his lot with the reformists in 2009 following allegations of widespread fraud in the presidential election that was won by former president and hardliner Mahmoud Ahmadinejad. Since then, Rafsanjani went through a difficult political period, as he was seen to be at loggerheads with the supreme leader, Ayatollah Ali Khamenei, who continues to support hardliners. Thwarted from becoming a presidential candidate in 2013, he rose to prominence again as the centrist candidate Hassan Rouhani he supported emerged victorious in the 2013 elections. Rafsanjani played a pivotal background role in the signing of the landmark nuclear deal between the P-5+1 countries and Iran. Hardliners have shown little inclination to go back on the deal that restricts any weaponising programme by Iran, but Rafsanjani’s death and a more volatile world order with the rise of Donald Trump in the U.S. suggest there could be challenges to the deal in the near future. Considering that reformists face stiff challenges presented by the theocrats who control the publicly owned media, the judiciary and other clerical supervisory bodies, they will certainly miss Rafsanjani. Even till the ripe age of 82, he managed to straddle various generations of pre-and post-revolutionary Iran and was a difficult figure for hardliners to overcome politically.

Joint Comprehensive Plan of Action (JCPOA)

  • It is known commonly as the Iran nuclear deal.
  • It is an international agreement on the nuclear program of Iran reached in Vienna on 14 July 2015 between Iran, the P5+1 (the five permanent members of the United Nations Security Council—China, France, Russia, United Kingdom, United States—plus Germany), and the European Union.
  • Under the agreement, Iran agreed to :

(i)       eliminate its stockpile of medium-enriched uranium,

(ii)     cut its stockpile of low-enriched uranium by 98%, and

(iii)    reduce by about two-thirds the number of its gas centrifuges for 13 years

(iv)   only enrich uranium up to 3.67% for the next 15 years

(v)     not to build any new heavy-water facilities for the next 15 years

(vi)   Uranium-enrichment activities will be limited to a single facility using first-generation centrifuges for 10 years. Other facilities will be converted to avoid proliferation risks.

  • To monitor and verify Iran's compliance with the agreement, the International Atomic Energy Agency (IAEA) will have regular access to all Iranian nuclear facilities.
  • The agreement provides that in return for verifiably abiding by its commitments, Iran will receive relief from U.S., European Union, and United Nations Security Council nuclear-related economic sanctions.

Back to Top