[Answered] The Centre has proposed amending a law to empower States and allow industries to pay wages by cheque or by direct credit into bank accounts. What can be the rational of this decision? Discuss.


In line with government’s bid to popularize digital transactions following the demonetization move Centre has proposed changes to the Section 6 of the Payment of Wages Act of 1936.

The proposal would make it “mandatory” for employers to pay remunerations to their employees either through cheques or bank transfers. Also State governments would specify the industry through official notifications where the payment of wages shall be made through cheques or direct credit in bank accounts.

 

Rationale:

  • Present law isn’t in tune with digital transactions:The present law states that all payment of wages should be made in cash,any payment to made by cheque or direct transfer to account requires a enabling written permission.
  • For effective enforcement of the act: It reduces complaints regarding non-payment or less payment of minimum wages, thus resulting into better enforcement of the act.
  • Towards digital and less cash economy: It would help move towards cashless economy.

 

As technology has moved on, its time to adopt digital transaction. Thus, this move would help in moving towards cashless society but would also be a part of labour reforms. Coupled with digital India programme, this amendment  would promote financial inclusion and also inculcate the banking culture among the unorganized sector.


 

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