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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.

The Water Safety Gap India Keeps Missing

From January 2025 to January 2026, sewage-contaminated piped water caused disease outbreaks in 26 cities across 22 states and union territories, sickening at least 5,500 people and killing 34. Sixteen state capitals were on that list.


In Gandhinagar, Gujarat’s capital, more than 150 children were hospitalised with typhoid in a single week after contaminated water entered the supply. In Bengaluru, residents of an entire layout reported diarrhoea and stomach infections after sewage contaminated drinking water lines. In Patna, residents describe tap water as so polluted that it causes itching on contact and cannot even be used to wash clothes.


These incidents were neither isolated nor the result of missing water testing standards. They happened because the gap between what water testing requires on paper and what is verified at the point of consumption has widened for years, largely unnoticed—a gap that runs through both municipal water supplies and the water sold to consumers in sealed bottles.


For much of India’s food safety conversation, water has remained a blind spot. It is neither packaged like a snack or sauce nor labelled to invite scrutiny. It arrives through pipes and taps, carrying the assumption that if it is flowing, it is probably fine.


Over the past two years, that assumption has repeatedly failed.


Infrastructure explains part of it. Ageing pipelines laid decades ago, often running alongside sewer lines without adequate separation, now serve cities whose populations have multiplied several-fold.


When a sewer line cracks under that strain, higher-pressure sewage often enters the drinking water network rather than the other way around. Nearly every outbreak across those 26 cities followed this mechanism. The fix is not mysterious. It is expensive, slow and politically unglamorous, which is why it keeps being deferred until an outbreak forces the issue.


More recently, regulators turned to water that never travels through municipal pipes. FSSAI reclassified packaged drinking water and mineral water as high-risk food, a category that already included dairy, meat and prepared foods, but not bottled water.


India’s packaged water market is vast and growing, yet until now a sector of this size had escaped the scrutiny applied to far smaller categories.


The reclassification followed the removal of mandatory Bureau of Indian Standards certification, a regulatory gap FSSAI officials acknowledged needed closing. Under the new framework, manufacturers must pass inspections before licensing and undergo annual third-party audits, subjecting bottled water to the same scrutiny historically reserved for more perishable products.


That shift matters because the perception of packaged water as a safer alternative to tap water has never been entirely accurate, and the data continues to confirm it.


Microplastics have been found in the overwhelming majority of tap water samples tested across Indian cities, and bottled water has not proved immune because source water entering bottling plants carries contamination that filtration does not always remove.


E. coli and other bacteria continue to surface in bottled products, reflecting inadequate sanitation at the source rather than failures in the bottling process. The packaging changes. The underlying water quality question often does not.


Ashwin Bhadri, Founder & CEO of Equinox Labs, sees this as the defining shift in how food safety in India must be understood over the next decade.


Water has long been treated as infrastructure rather than food, he says, and that classification gap has real consequences. Infrastructure is maintained on a budget cycle, while food safety is tested on a risk cycle—fundamentally different timelines.


Repairing a pipeline because the capital budget allows it is not the same discipline as a food manufacturer testing every batch because regulations require it.


Treating packaged water as high-risk food, as FSSAI has done for the packaged category, is the correct instinct. The harder task is extending that approach to the municipal supply serving the overwhelming majority of Indian households, many of whom have neither a packaged alternative nor any way to verify what comes out of their tap.


The deeper problem behind both the municipal outbreaks and the packaged water reclassification is one that surfaces in nearly every Indian food safety story: testing and standards exist, but verification at the point that matters remains inconsistent—whether in an apartment sump, a bottling plant drawing from a compromised borewell, or a pipeline running too close to an uninspected sewer line.


A standard not independently verified at the point of consumption exists mostly on paper, and paper has never stopped sewage from entering a pipe.


India’s relationship with water has long assumed abundance guarantees quality. It does not.


With urban populations expected to exceed 500 million by 2030 and ageing infrastructure absorbing ever greater pressure than it was designed for, the question is not how much water reaches people. It is whether anyone tested it before they drank it.


(The writer is the Founder and CEO of Equinox Labs. Views personal.)

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