top of page

By:

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.

Pakistan’s Kashmir Crisis

As unrest engulfs Pakistan-occupied Kashmir, economic hardship, political alienation and a forceful state response are exposing the widening cracks in Islamabad’s governance of the region.

Pakistan today finds itself confronting multiple internal crises at once. While the world focuses on its troubled ties with Afghanistan and the long-running insurgency in Balochistan, another front has opened within Pakistan-occupied Kashmir (PoK). Weeks of sustained protests have exposed a reservoir of public anger that has been building for decades.


Political Instability

Ever since its creation, Pakistan has struggled with political instability, economic uncertainty and regional discontent. Nowhere is this more evident than in PoK. Although Islamabad has long projected the territory as an integral part of its Kashmir policy, it has failed to provide the region with responsive governance, meaningful political representation or sustained economic development. The present turmoil is the consequence of decades of accumulated neglect.


The protests that intensified over the past several weeks did not erupt in a vacuum. According to protest groups and local reports, more than 140 people have died during nearly 50 days of unrest, while many more have been injured. The demonstrations have spread across key towns, including Muzaffarabad and Rawalakot, bringing into sharp focus the widening disconnect between the people and the Pakistani state.


At the heart of the agitation lie everyday grievances. Inflation has pushed the prices of essential commodities beyond the reach of ordinary citizens. Electricity tariffs have risen sharply. Shortages of subsidised wheat flour have fuelled public resentment. The public distribution system has steadily deteriorated, while unemployment, poverty and inadequate public services have further deepened the crisis. For many residents, these are not temporary hardships but symptoms of decades of administrative failure.


The absence of meaningful dialogue between Islamabad and the people of PoK has created precisely such a vacuum. Genuine demands raised by the Joint Awami Action Committee (JAAC) have, in the opinion of its supporters, been met with indifference rather than engagement. As frustration mounted, demonstrations became the only avenue through which ordinary citizens could express their grievances.


Political representation has emerged as another major flashpoint. Critics argue that local institutions possess limited autonomy and that important decisions continue to be dictated from Islamabad. Public anger has intensified following the cancellation of 12 reserved Assembly seats for Kashmiri refugees, a move that many believe has further weakened democratic representation.


Coercive Tactics

Instead of addressing these concerns through dialogue and reform, Pakistan has largely relied on coercion. Security forces have launched extensive crackdowns against demonstrators, with reports alleging the use of live ammunition and military-grade weapons in densely populated areas.


The Pakistani government has responded by banning the Joint Awami Action Committee under anti-terrorism laws. Defence Minister Khawaja Asif has defended the security operations and accused protesters of acting in India's interest. Such accusations, however, do little to address the underlying issues that brought thousands onto the streets. Branding dissent as external conspiracy may serve immediate political purposes, but it cannot substitute for governance.


The unrest has also drawn support from Pakistani students, who have organised demonstrations in Islamabad, Lahore and Karachi, demanding justice for the protesters and calling for an impartial investigation into the violence. Their participation indicates that the issue has expanded beyond PoK and now resonates with wider concerns about democratic rights and state accountability within Pakistan itself.


The crisis reflects a deeper structural failure. Pakistan’s promise of national unity has repeatedly been tested by ethnic, regional and political fault lines. Balochistan continues to witness insurgency, while unrest in PoK points to another region where the relationship between the state and society has steadily deteriorated. Without inclusive governance and meaningful political participation, such tensions are unlikely to disappear.


India should seize this strategic moment to work towards the liberation of PoK from decades of injustice, maladministration and state-sponsored violence. The mistake committed during the early years of the Kashmir dispute should now be corrected through decisive national policy.


Such a course would not merely strengthen India's strategic position but also help integrate the entire region of Jammu and Kashmir under the Union of India. Following the abrogation of Article 370, the next logical step is to reclaim PoK, thereby ending Pakistan’s use of the territory for cross-border terrorism.


(The writer is a foreign affairs expert. Views personal.)

Comments

bottom of page