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Correspondent

21 August 2024 at 10:20:16 am

Fee Signal

The government’s decision to create a legal framework for levying charges on UPI transactions has understandably triggered concern, even though it insists that ordinary users and small merchants will continue to enjoy free payments. The proposed amendment does not impose a fee on UPI today. But it removes the statutory barrier to one being imposed in the future, making the government’s reassurance less than the final word. The government argues that this is a measure for UPI’s long-term...

Fee Signal

The government’s decision to create a legal framework for levying charges on UPI transactions has understandably triggered concern, even though it insists that ordinary users and small merchants will continue to enjoy free payments. The proposed amendment does not impose a fee on UPI today. But it removes the statutory barrier to one being imposed in the future, making the government’s reassurance less than the final word. The government argues that this is a measure for UPI’s long-term sustainability. The world’s largest real-time payments system, which processed 2,366 crore transactions worth Rs. 29.9 lakh crore in July alone, cannot indefinitely depend on subsidies as transaction volumes, cybersecurity requirements and infrastructure costs rise. A nominal Merchant Discount Rate on larger merchant transactions, it says, would help create a more sustainable ecosystem without burdening ordinary users. That argument has merit. But so does the concern that a payment system which became a national habit precisely because it was cheap and frictionless should not slowly acquire a price tag. Once the legal machinery for charging exists, there is no guarantee that the boundary between large merchants and small ones, or between merchants and consumers, will remain permanently fixed. The Finance Minister has clarified that any Merchant Discount Rate will apply only to a limited set of merchant transactions above a threshold and will be nominal, well below card-payment rates. The details will eventually be decided by the UPI and Services Steering Committee headed by the National Payments Corporation of India. In other words, there is no charge on the table for the ordinary UPI user today. But there is now a legal mechanism for charges to be introduced tomorrow. That is precisely why any alarm, though exaggerated, cannot simply be dismissed. The government, through its clarification, has reassured that UPI’s free-to-consumer model remains intact. The important issue is whether its financing model can evolve without undermining the habits that made it revolutionary. UPI succeeded partly because it made digital payments cheaper and simpler than alternatives. There is also a larger principle at stake. UPI is not merely another commercial payments platform. It is the product of public investment, regulatory architecture and private innovation. The state should therefore be wary of treating its sustainability as an ordinary market problem. The sensible answer lies between free-for-all subsidies and indiscriminate fees: transparent thresholds, genuinely low MDRs, strong protection for small merchants and an absolute firewall around ordinary consumers. The government should publish the economic case for any future charge, including its effect on merchants and consumers. UPI was built on trust as much as technology. The government is right to protect its remarkable achievement. It should remember that keeping UPI free is not merely a political promise. It is part of the product.

‘Haq ka pani’ – Reclaiming India's Rightful Share

Prime Minister Narendra Modi's Independence Day assertion last year that "Haq ka pani" will serve Indian farmers marks a decisive shift in India's approach to the Indus Waters.


Far from being a departure, it is a long-overdue correction of historical restraint that has disproportionately disadvantaged India while enabling persistent misuse downstream. It signals that India will no longer allow its rightful share of water to go underutilised and wasted while its own farmers face scarcity.


When the Indus Waters Treaty was signed in 1960, India, as the upper riparian, made a remarkable concession by agreeing to restrict itself to about 20 per cent of the Indus system waters, allocating the overwhelming 80 per cent share to Pakistan. This decision reflected extraordinary goodwill.


The expectation was that such generosity would be matched by responsible conduct and a cooperative spirit. Instead, over the decades,  that spirit was never reciprocated.


Prime Minister Modi's statement must also be seen against the backdrop of repeated acts of cross-border terrorism emanating from Pakistan that have vitiated the trust.


The long-standing reality, captured in the phrase, "blood and water cannot flow together", is no longer rhetorical. Incidents such as the Pulwama terror attack, along with other attacks in the Valley, including the Pahalgam region, have underscored how sustained hostility undermines the very foundation on which cooperative arrangements like the Treaty rest.


No agreement, however well-crafted, can remain insulated from a complete breakdown of trust.


At a structural level, the Treaty itself contained asymmetries that became increasingly untenable. It imposed considerable restrictions on India's use of its allocated waters, yet places no corresponding obligation on Pakistan to justify its requirements or ensure efficient utilisation.


This is reflected in the widespread inefficiencies, losses in irrigation systems (estimated at about 47 MAF), inadequate storage and poor water management on their side leading to large volumes of Indus waters (upto 35 MAF) flowing to the Arabian Sea unutilized.


Meanwhile, India has borne the cost of restraint. Regions such as Rajasthan and Haryana have remained water-stressed, their agricultural potential constrained despite the availability of water that India is entitled to use.


This imbalance is precisely what the statement seeks to correct. "Haq ka pani" is, therefore, about rightful utilisation, not denial.


India is asserting that every drop of the Indus system will now be used productively for irrigation, hydropower and development.


Indian projects on the Western rivers, including Baglihar and Salal, highlight another dimension of the challenge. Over time, sedimentation has reduced their efficiency and storage capacity.


Flushing operations, essential for maintaining dam safety and performance, were delayed for years due to unfounded objections and procedural hurdles created by Pakistan.


The eventual need to remove accumulated sediment only reinforced the cost of such delays. Going forward, India's approach will prioritise timely, state-of-the-art technical interventions, without being held hostage by malign and hyperbolic political theatrics disguised as technical differences.


The broader message is clear. First, India will fully utilise its rightful share of water in water-stressed regions. Second, it will no longer accept a framework where inefficiency and waste go unchecked on one side while artificial and unscientific constraints are sought to be imposed on the other.


Third, it will assert its technical autonomy, ensuring that infrastructure creation and maintenance proceed apace, in line with current scientific thinking and international best practices.


This is not a repudiation of any customary principles; it is a response to the destruction of the foundational pillars of the Treaty. When the very promises that undergird a treaty are breached by hostility, terror, misinformation, and misuse, recalibration becomes inevitable.


For decades, India exercised patience, even at tangible cost to its own development. That era is giving way to one of clarity and balance. "Haq ka pani" is an overdue commitment that India's water will serve its people, its farmers, and its future.


While some vested interests may try to mischaracterise it as a threat, it is nothing but a necessary course correction in a changing context.


(The writer is Former Chairman of Central Water Commission.)

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