The Union Finance Ministry on Monday asked all government departments to make payments above Rs 5,000 via e-payment facilities. “Any payment above Rs 5,000 to suppliers, contractors, grantee/loanee institutions etc by government departments to be made now through e-Payment,” said the ministry, adding that the order must be implemented with immediate effect.

According to a memo issued by the expenditure department and approved by Finance Minister Arun Jaitley, the step has been taken “in order to attain the goal of complete digitisation of government payments”, reported The Hindu. In August this year, the government had capped cash payments at Rs 10,000.

Earlier, the Centre had said it was considering making all its purchases through an e-commerce marketplace soon. The portal, which was set up by the national e-governance division of the government, has been operational since August and has already facilitated transactions worth Rs 39 crore. The new system will also allow vendors to bid for any government purchase across India. As of now, the government issues tenders to make any purchase, which allows for price manipulation, and often leaves out local suppliers.

In a bid to tackle counterfeit cash and black money issues, on November 8, Prime Minister Narednra Modi had announced that Rs 500 and Rs 1,000 would no longer be legal tender, following which there has been a severe cash crunch in the country. However, the move has been heavily criticised by the Opposition and several economists. While former prime minister Manmohan Singh had called the move “a monumental management failure”, West Bengal Chief Minister Mamata Banerjee had said that it was a “draconian decision”.