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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.

Why India’s Farms Need Smarter AI

Predictive and agentic intelligence can identify vulnerable farmers early, coordinate timely interventions and make agricultural supply chains more resilient.

India’s artificial intelligence conversation has largely focused on productivity. Policymakers speak of higher yields, precision farming and digital marketplaces. Technology companies promise smarter irrigation, better weather forecasts and more efficient logistics. Yet one critical variable often remains missing from these discussions: the farmer.


Agricultural supply chains falter when climate shocks, delayed payments, poor health, labour exhaustion and financial distress reinforce one another. Treating each challenge in isolation has produced fragmented solutions. Artificial intelligence offers an opportunity to connect these risks instead of compartmentalising them.


Predicting Vulnerability

The future of agricultural AI, therefore, lies not merely in predicting crops but in predicting vulnerability. Evidence from a primary survey of 150 sugarcane cultivators in Daund taluka of Pune district illustrates why this matters. The study examined production, labour, health, nutrition, healthcare expenditure, borrowing, social protection and Farmer Health Capital (FHC) - a framework on which this author has done considerable work, and that views a farmer’s physical capacity as productive economic capital rather than simply a health outcome.


The findings are sobering. Every surveyed farmer reported crop loss, while 96 per cent experienced delayed sugarcane payments. During the crushing season, farmers worked an average of 10.97 hours a day but slept only 5.23 hours. Average back and joint pain measured 7.73 on a ten-point scale, and more than a quarter identified musculoskeletal problems as their principal illness.


These statistics reveal systemic economic risk. FHC argues that physical health directly influences labour availability and, by extension, agricultural productivity. The survey recorded an average Farmer Health Capital Index of 0.479, while econometric analysis showed that physical health significantly predicted farmers’ confidence about the following agricultural season (p<0.001). Confidence, in this context, reflects expectations about one’s ability to continue farming effectively.


Such evidence provides an ideal foundation for predictive AI.


A Farmer Risk Intelligence System could combine health indicators with weather forecasts, crop conditions, labour demands, payment histories and household financial data. Rather than analysing these variables independently, machine-learning models could identify combinations that signal elevated production or livelihood risk. A farmer simultaneously facing crop loss, chronic physical pain, long working hours, sleep deprivation and delayed payments would receive an early-warning risk score long before a crisis becomes irreversible.


Prediction, however, is only half the story. The next generation of artificial intelligence is increasingly described as agentic because it can coordinate workflows after identifying a problem. In agriculture, that means AI should not simply recognise vulnerability; it should help organise timely responses.


When approved risk thresholds are crossed, an agentic system could notify farmer-producer organisations, extension workers or local administrators. It might recommend hydration and ergonomic interventions during peak labour periods, flag delayed payments requiring administrative attention or connect eligible households with healthcare, insurance or credit-support schemes. Importantly, financial, medical and entitlement decisions should remain subject to human approval and farmer consent. AI should coordinate responses, not replace human judgement.


Survey data show that average out-of-pocket healthcare expenditure reached Rs. 23,233 per season, while 90 of the 150 surveyed farmers reported borrowing to meet medical emergencies. Using these parameters, a calibrated economic simulation evaluated a preventive investment of Rs. 5,000 per household—roughly 1.88 per cent of average seasonal sugarcane revenue. Assuming a conservative 10 per cent recovery in lost labour efficiency, the model estimated approximately Rs. 26,597 in additional household revenue.


The same simulation estimated a potential public saving of around Rs. 7,000 per household when modest preventive expenditure reduces subsequent healthcare liabilities. Again, this represents a modelled scenario rather than realised savings. But it establishes a measurable benchmark against which future AI-enabled programmes can be evaluated.


Nor is this architecture confined to sugarcane. Cotton, grapes, onions, wheat, rice, pulses and other value chains confront similar combinations of climate uncertainty, labour stress and financial vulnerability.


India has declared its ambition to become a global leader in artificial intelligence. Agriculture should be one of the sectors where that ambition delivers its greatest social return. But success should be measured by whether technology helps farmers remain healthy enough, financially secure enough and resilient enough to keep producing.


If predictive intelligence can identify vulnerability before it becomes crisis, and agentic systems can coordinate timely, human-centred interventions, agricultural data cease to be merely descriptive. They become a digital shield by protecting farmers, strengthening supply chains and making India’s food economy more resilient from the ground up.


(The writer is a member of Maharashtra Agriculture Price Commission. Views personal.)

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