IAS Gyan

Daily News Analysis

E-Rupi Promise:

13th August, 2021 Economy
  • e-RUPI is a digital prepaid, purpose- and person-specific payment utility.
  • It brings the ease and simplicity of UPI to the social security platform of DBT.
  • The one-time payment mechanism has been developed by the National Payment Corporation of India (NPCI), with the support of the Department of Financial Services, the Ministry of Health and Family Welfare, and the National Health Authority.
  • It is very similar to the gift vouchers we get online but this time it is the government who is releasing it. This may be the government’s first step in launching a digital currency.

Usage of E-Rupi: Example

  • Its immediate and first-use case is to facilitate cashless service at paid Covid vaccination centres (CVCs). For instance, corporates and philanthropies can buy services in bulk to vaccinate employees and those in need. The intended beneficiaries will receive an SMS or QR code on their feature/smartphone, redeemable for cashless vaccination at participating centres. A single-source MIS gets created effortlessly at the back end.

Working of the E-Rupi:

  • At the point of presence, the verification code received by the beneficiary is shared with the service provider to authenticate and authorise the transaction.
  • Payment is Contactless, real-time payment and online settlement of funds into the service provider’s bank account.
  • Fourteen leading banks have already integrated it with their systems.
  • Transactions will be secure and will be keeping the details of the beneficiaries completely confidential, maintaining their privacy.

 

Utility :

  • There is a continuous debate between Cash subsidy and Kind subsidy. e-RUPI could break the policy logjam by making cash transfers purpose- and person-specific, freeing them from dependence on bank accounts and providing visibility from the time of issue until redemption.
  • The adoption of e-RUPI in various government programmes will enhance business efficiency, simplicity, transparency, and accountability in these
  • it will help the government sharpen targeted welfare programmes.
  • The private sector will find it helpful to disburse non-cash benefits to employees and support focussed CSR programmes.
  • This digital payment system can provide equal access to financial, healthcare, and welfare services to each and every citizen of our country.
  • Later, individuals could use it for gifting.

 

Usage in Sharpening the government subsidies:

  • Usage in PDS: e-RUPI could make the PDS programme more efficient. A food-specific e-RUPI voucher will allow beneficiaries to buy rations from an outlet of their choice.
  • Check the Market Distortion: The value addition beyond the One Nation, One Ration Card will come from removing price distortion and the redemption of the voucher at market price by merchants within and outside the PDS network.
  • Farmers Subsidy: It could also be used to streamline fertiliser subsidies to farmers. e-RUPI will enable farmers to buy fertiliser at nominal prices with direct credit of the subsidy amount into the account of the authorised dealers. 
  • School Voucher Programme: e-RUPI is almost custom-designed for school voucher programmes. The efficacy of these programmes is well established in many countries. 
  • Basic Income Support: e-RUPI can mitigate stress of lost livelihoods by rapidly distributing food and cash vouchers at scale.
  • Usage in Ayushman Bharat initiative: Beneficiaries will receive e-RUPI vouchers of designated value tenable at empanelled healthcare facilities, providing them portability and facility choice. The service provider will benefit from the immediate payment.

Challenges:

  • The government has maintained the privacy issue here but if the merchant doesn’t cross-check someone’s identity then anyone can claim these benefits.

Conclusion:

  • Light regulation and the opening of e-RUPI to competition will spur innovation and adoption.
  • All banks, small and big, NBFCs, non-bank PPI issuers, and telcos may be allowed to issue it later.