Mumbai, Sep 21(DC): The government started the initiative of providing discount at petrol pumps on card payment, after demonetisation, owing to the cash crunch and to promote digital payment system.

Initially, after demonetisation, the government started providing a discount or cashback of 0.75 per cent on total fuel charges paid through digital payment system.

In less than 20 months of proividing cashbacks at petrol pumps the government reduced the 0.75 per cent discount to 0.25 per cent. According to a report from Mint, the oil companies did not expect the discount or cashback scheme to last this long, but now it is going to end from March 2019.

Oil companies had paid a whopping Rs 1,165 crore as discounts on digital payments and Rs 266 crore to banks for handling Merchandise Discount Rate, which was to be borned by the government for two years, totalling to Rs 1,431 crore in the 2017-18 fiscal. According to the oil companies, they estimate an amount of Rs 2,000 crore to be paid for the current fiscal.

Only a month after the demonetisation of old 500 and 1,000 rupee currency notes, the government announced a number of measures, including discounts on online payments for insurance policies, rail tickets and toll charges as the government looked to promote plastic currency.

The digital payment has declined drastically, as cash came back in the system, but for the oil companies it increased from 10 per cent in 2016 to 25 per cent in 2018.

There are speculations of similar cut in discounts or incentives on digital payments for other services that had started in December 2016 after demonetisation.