{"id":201772,"date":"2022-08-24T19:09:57","date_gmt":"2022-08-24T13:39:57","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=201772"},"modified":"2022-08-24T19:10:37","modified_gmt":"2022-08-24T13:40:37","slug":"let-upi-stay-successful-as-a-special-public-good","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/let-upi-stay-successful-as-a-special-public-good\/","title":{"rendered":"Let UPI stay successful as a special public good"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article\u00a0\u201c<\/strong>Let UPI stay successful as a special public good\u201d\u00a0<\/strong>published in\u00a0Live Mint\u00a0<\/strong>on\u00a024th<\/sup>\u00a0August 2022<\/strong>.<\/p>\n

Syllabus<\/strong>: GS 3 \u2013 Economy<\/p>\n

Relevance<\/strong>: Issues associated with UPI.<\/p>\n

News:<\/strong> No service is costless but some deserve a public subsidy. While UPI is our prime mover in the online payments space, we could also count on an RBI-issued e-rupee to help us go cashless.<\/p>\n

What is the current situation of India in online payment?<\/strong><\/h5>\n

India\u2019s present digital payment system is featured by following 2 points:<\/p>\n

First,<\/strong> we have confusing payment mechanisms: from RTGS and NEFT to IMPS and UPI.<\/p>\n

Second,<\/strong> \u2018India Stack\u2019 has been remarkably successful. It is the building block for digital enablers with Aadhaar identification at its base.<\/p>\n

What is the issue with the UPI payments?<\/strong><\/h5>\n

Merchants are paid very less from National Payments Corp of India\u2019s (NPCI) Unified Payments Interface (UPI), which shifts cash from one bank account to another by using verified phone numbers.<\/p>\n

Centre ended a 0.3% fee on deal value (or\u00a0\u20b9100 if lower) that recipients had to pay to boost cashless transactions.<\/p>\n

As estimated by the RBI, UPI transactions cost 0.25% of transactions and central funds to compensate financial intermediaries for it have fallen short.<\/p>\n

For any system to sustain itself it must not burden private players.<\/p>\n

UPI as a Digital Public Good and concerns associated with it<\/strong><\/h5>\n

The finance ministry described UPI as a \u201cdigital public good” due its convenience for users and potential gains for our economy.<\/p>\n

A public good is one that satisfies a need and is free for anyone to use. According to economists, any scarcity of such goods would lead to over-exploitation which will result in a net drop in welfare.<\/p>\n

Concerns<\/strong>: The payment volumes will likely go beyond an annual\u00a0\u20b9120 trillion, so its subsidy bill could increase over\u00a0\u20b930,000 crore in 2023-24. In order to cut the cost of the subsidy, it will be better for the Centre to come up with the operational expense of the UPI payments.<\/p>\n

What should be the course of action for government?<\/strong><\/h5>\n

The state should not subsidize other modes of online payment, especially those which are costlier to operate and used for larger sum.<\/p>\n

Rupay card which is operated by NPCI was launched as a rival to Visa and Mastercard networks. It should charge merchants a fee and act only as a cost competitor.<\/p>\n

\u2018Smart money\u2019 usage can be made chargeable even as basic transfers are kept free.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article\u00a0\u201cLet UPI stay successful as a special public good\u201d\u00a0published in\u00a0Live Mint\u00a0on\u00a024th\u00a0August 2022. Syllabus: GS 3 \u2013 Economy Relevance: Issues associated with UPI. News: No service is costless but some deserve a public subsidy. While UPI is our prime mover in the online payments space, we could also count… Continue reading Let UPI stay successful as a special public good<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10501],"class_list":["post-201772","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-live-mint","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":1700781806,"cached_date":1704869063},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/201772","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=201772"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/201772\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=201772"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=201772"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=201772"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}