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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.

Imperilled Indians

The death of 13 Indians and the disappearance of three others in the unabating US-Iran conflict should end any illusion that this is merely another distant geopolitical crisis. For India, West Asia is not an abstract theatre of great-power rivalry but home to nearly nine million Indian expatriates. Every missile fired across the Strait of Hormuz carries the potential to claim Indian lives.


While the Ministry of External Affairs has expressed concern, called for uninterrupted navigation and condemned attacks on commercial shipping, these statements are not enough. Indian seafarers have reportedly suffered the highest number of fatalities among all nationalities serving aboard commercial vessels caught in the conflict. Merchant sailors have become unwilling participants in a war that is not theirs.


They continue to crew ships because global commerce cannot simply pause when missiles begin to fly. The burden of that reality now falls disproportionately on Indian workers.


India’s foreign policy has long prided itself on strategic autonomy. In theory, that means avoiding entanglement in rival blocs while maintaining cordial relations with all sides. In practice, however, neutrality cannot become passivity when Indian citizens are paying with their lives. Protecting nationals abroad is not incompatible with diplomatic balance. It is among the first duties of any state.


The conflict has also exposed a larger vulnerability. India’s dependence on the Gulf extends far beyond oil. Millions of Indians work across the region in construction, healthcare, shipping, logistics and services. Their labour underpins both Gulf economies and countless households back home. Every escalation places these workers at risk. Waiting until evacuations become necessary is an admission that diplomacy has already failed.


New Delhi should therefore adopt a more assertive posture. It should intensify engagement not only with Washington and Tehran but also with Gulf capitals, pressing collectively for the protection of civilian shipping and maritime workers. It should work more actively through multilateral forums to reinforce international maritime law and freedom of navigation. Most importantly, it should make the safety of Indian nationals a central element of every diplomatic conversation concerning the conflict, rather than a humanitarian afterthought.


India has legitimate strategic partnerships with the United States, Israel, Iran and the Arab Gulf states alike. Those relationships should provide leverage, not excuses for silence. Friends should be told uncomfortable truths when their actions endanger innocent civilians.


The deaths of Indian seafarers are not collateral statistics to be acknowledged at weekly briefings before the news cycle moves on. They are evidence that global conflicts increasingly reach India’s doorstep through its citizens overseas. A nation aspiring to global influence cannot speak softly when its own people bear the costs of others’ wars.


India has every reason to call for peace. It now has an even greater obligation to demand it with urgency, clarity and far greater diplomatic weight.

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