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By:

Sumit Ranjan Das

21 August 2024 at 4:08:59 pm

UPI Must Stay Free

AI Generated Image Yesterday, I went to my neighbourhood shop to buy aloo chop and vegetable chop to eat with muri. I reached for my phone to pay by UPI, as I do for almost everything. The shopkeeper stopped me. “This is the last time we’ll accept UPI. From tomorrow, CASH ONLY.” I didn’t argue or explain that payments up to Rs. 2,000 remain free. It would have been a waste of breath. So I let it go, but I kept thinking about it on the walk home because I think I know what he was afraid of....

UPI Must Stay Free

AI Generated Image Yesterday, I went to my neighbourhood shop to buy aloo chop and vegetable chop to eat with muri. I reached for my phone to pay by UPI, as I do for almost everything. The shopkeeper stopped me. “This is the last time we’ll accept UPI. From tomorrow, CASH ONLY.” I didn’t argue or explain that payments up to Rs. 2,000 remain free. It would have been a waste of breath. So I let it go, but I kept thinking about it on the walk home because I think I know what he was afraid of. Picture a vegetable vendor with a pushcart at the corner of your lane. Call him Ramesh. He studied up to Class 8. Two years ago, he put a QR code on his cart because someone told him one thing: “Bhaiya, UPI is free. The money comes straight to your bank.” That one sentence did more for Digital India than any seminar. No card machine, no fee, no paperwork. Now tell Ramesh that a Merchant Discount Rate (MDR) may apply to specified transactions above Rs. 2,000, subject to exemptions. He won’t argue. He will put up a board: CASH ONLY. MDR is the fee a merchant pays to accept a digital payment, and UPI has been free for merchants since 2020. The new framework proposes a fee of 0.4 per cent on specified merchant transactions above Rs. 2,000, with a cap of Rs. 300 on transactions above Rs. 75,000. Payments up to Rs. 2,000 remain free. Person-to-person transfers are not covered, and under the announced plan, customers are not charged directly. On a Rs. 10,000 merchant payment, the merchant would pay Rs. 40. Small merchants receiving less than Rs. 1,00,000 a month through UPI were proposed to be exempt. One report adds that the committee was reportedly considering exempting businesses with annual turnover of up to Rs. 40 lakh. On October 13, the National Payments Corporation of India (NPCI) said the fee, due to be implemented on October 15, would be introduced immediately after Diwali, on a date to be notified separately. The decision merley postpones the fee. Consider Ramesh again. Suppose he sells Rs. 5,000 worth of vegetables a day, mostly through payments of Rs. 30 to Rs. 300. That amounts to around Rs. 1,50,000 a month, or roughly Rs. 18 lakh a year. Every one of his payments is below Rs. 2,000, so under the proposal, they remain free. But his monthly receipts exceed Rs. 1 lakh, which means he cannot simply assume that the small-merchant exemption covers him. Who will tell him? Who will explain it in Bengali, Hindi or Maithili, at his cart, in two minutes? A vendor who cannot understand the rules will choose the option that feels safest: cash. Cash is not the enemy. But for a small merchant, it also means hunting for change and losing customers who do not have it, facing the risk of theft, loss and counterfeit notes, spending time counting, storing and depositing money, and having fewer digital records to show a bank when seeking credit. “Free” does not mean UPI costs nothing to run. Security, fraud control, banking systems and customer support all require money. In March 2025, the Union Cabinet approved an incentive of Rs. 1,500 crore for low-value BHIM UPI merchant transactions for the financial year 2024–25. Genuine welfare must never be treated as a piggy bank. Every rupee, whether spent on welfare or infrastructure, should deliver greater value. Five measures would help keep UPI simple. First, person-to-person UPI transfers must remain free. Sending money to family should never come with an unexpected charge. Second, protection for small merchants must be straightforward. Thela-walas, tea stalls and kirana shops need one clear exemption, not five clever ones. Third, UPI must be funded transparently. The government and relevant institutions should publish what it costs to run the system, how much public money supports it, how much any proposed fee collects and what results follow. Fourth, the rules must be explained in local languages. A one-page notice or a short voice message through a payment app would reach Ramesh faster than a 20-page circular. Finally, the impact must be measured before any fee is extended. Changes in small-merchant acceptance and transaction volumes should guide the next step. India did not build UPI by making it clever. It built it by making it simple and free. (The writer is a Cost and Management Accountant and founder of TaxoDas. Views personal.)

Counting Heads, Weighing Power

Apr 20
5 min read

India’s long-delayed delimitation, now entangled with women’s reservation and an overdue census, risks turning a democratic necessity into a  major political standoff.

The greatest strength of Indian democracy lies in its population and its diversity. Yet, this very strength now raises a fundamental question has political representation kept pace with the country's rapidly growing population? And if not, can we claim to be upholding the spirit of democracy by continuing to defer delimitation? At the heart of this debate lies a complex triangle, women's reservation, the census, and the redrawing of parliamentary constituencies, each being interpreted through competing political lenses. This tension echoes debates from the Constituent Assembly, where leaders of the newly Independent India had grappled with how to balance population-based representation with the federal principle, wary even then of the distortions sheer demographic weight could produce.


Equitable Representation

In 1971, when India’s population stood at just 548 million, the number of Lok Sabha seats was fixed at 543. Following the 1973 delimitation exercise, seats were increased from 522 to 542, and later one additional seat was added for Sikkim, taking the total to 543. At that time, the decision neither triggered controversy nor raised serious questions about the intent of the government. However, today, with India’s population having crossed approximately 1.47 billion, nearly three times what it was in 1971, the number of Lok Sabha seats remains unchanged. This imbalance is not merely statistical but one that strikes at the very principle of equitable representation.


The roots of this freeze lie in the 42nd Constitutional Amendment of 1976, enacted during the Emergency under Indira Gandhi, which sought to incentivise population control by ensuring that states which succeeded in reducing fertility would not be penalised with fewer parliamentary seats.


Even if one considers the 2011 Census as the benchmark, India’s population had already reached 1.21 billion, two and a half times higher than in 1971. Clearly, the gap between population and representation has widened steadily over the decades. In such a scenario, the reorganization of parliamentary constituencies (delimitation) is no longer just an administrative exercise but a democratic necessity. Earlier exercises carried out in 1952, 1963 and 1973 were relatively routine, conducted in a political environment dominated by a single party, the Indian National Congress. That consensus has since fractured in a far more competitive and federalised polity.


Delimitation refers to the process of redrawing electoral boundaries based on population, ensuring that each elected representative speaks for a roughly equal number of citizens. Mandated under Articles 82 and 170 of the Constitution, it is carried out by an independent Delimitation Commission using census data. The Commission is vested with powers akin to a civil court, and its recommendations are final, neither subject to judicial challenge nor open to legislative amendment. The last such commission, constituted in 2002, had operated under a constitutional freeze that prevented any change in the allocation of seats between states, limiting itself instead to intra-state boundary adjustments. It was a compromise that postponed, rather than resolved, the deeper question of representational imbalance.


Political Divide

At the center of the current controversy is women’s reservation. The Nari Shakti Vandan Act provides for 33 percent reservation for women in the Lok Sabha and state assemblies, but its implementation has been linked to a fresh delimitation exercise. This is where the political divide begins. The government argues that reservation must reflect updated demographic realities, while the opposition views the move as an attempt to recalibrate political power under the guise of delimitation. The idea of reserving seats for women is itself decades old, first introduced as a bill in 1996 and repeatedly stalled despite broad support, reflecting entrenched anxieties within political parties about redistributing safe seats and altering internal hierarchies.


Opposition parties contend that delimitation should not proceed until the completion of the upcoming census, particularly a caste-based enumeration. Their argument is that without updated socio-economic data, any redrawing of constituencies could deepen regional and social imbalances. Rahul Gandhi, the Leader of the Opposition in the Lok Sabha, went so far as to express apprehension that the political power of southern and smaller states could be diminished through delimitation. Leaders from states such as Tamil Nadu and Kerala have long argued that their success in lowering fertility rates should not translate into diminished influence in Parliament, reviving an old north-south fault line in Indian federalism.

 

Equally significant is the issue of timing. The Census 2027 process is underway, with final data expected by the end of 2027 and detailed reports by 2028. Delimitation would follow, typically taking 1.5 to 2 years, though historically it has stretched to 3-6 years. By this timeline, implementing women's reservation before the 2029 general elections appears highly unlikely. In such a case, it may be deferred until as late as 2034. This delay mirrors the fate of earlier institutional reforms in India, where procedural sequencing has often served as a de facto veto, allowing governments to claim intent without confronting immediate political costs.


Policy vs Strategy

This is where policy priorities collide with political strategy. The government maintains that delimitation is essential to align representation with population and to implement women's reservation meaningfully. The opposition, however, frames the issue as one of intent, questioning whether the move genuinely aims at women's empowerment or at reshaping electoral arithmetic. For the ruling Bharatiya Janata Party, which draws significant support from populous northern states, the incentives of a fresh delimitation may differ markedly from those of regional parties whose influence is geographically concentrated.


History, too, is being invoked in this debate. The 1973 delimitation was followed by the Emergency in 1975, widely regarded as one of the darkest chapters in Indian democracy. While the contexts are vastly different, the opposition uses this reference to suggest that governments can, at times, use institutional processes like delimitation to consolidate power. Whether this comparison holds is debatable, but it underscores the political sensitivity surrounding delimitation.

 

Notably, there is near-universal agreement among political parties in principle on women's reservation. No party openly opposes it. However, disagreements emerge sharply over the method and timing of its implementation. This paradox reflects a broader trend in Indian politics; consensus on ideals, but discord on execution.

 

The critical question, therefore, is whether these disagreements will cost the country a historic opportunity. Will the aspiration to ensure political representation for half the population remain entangled in procedural delays? Or can a pragmatic middle path be found, one that preserves democratic balance while advancing women's empowerment?

 

Solutions are possible, provided there is political will. One approach could be to delink women's reservation from delimitation and implement it in phases within the existing framework. Another would be to make the census and delimitation processes strictly time-bound and transparent, thereby reducing uncertainty and mistrust.

 

Ultimately, population growth is not merely about numbers, it reflects an expansion of aspirations. If those aspirations are not matched by fair representation, the democratic equilibrium begins to falter. Delimitation is the mechanism to restore that balance, while women's reservation offers a chance to make it more inclusive.

 

What is needed today is for political actors to look beyond immediate gains and losses, and approach the issue from the perspective of long-term national interest. For this is not just about increasing the number of seats in Parliament, it is about shaping the very architecture of India's democratic future.

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