Now Reading: Parliament panel flags Rs 20,700 crore UPI funding gap
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Parliament panel flags Rs 20,700 crore UPI funding gap
A parliamentary standing committee has warned of a Rs 20,700 crore funding gap in UPI, against a government allocation of just Rs 2,000 crore. The committee, chaired by Bhartruhari Mahtab, said the…
The Story in Brief
A parliamentary standing committee has warned of a Rs 20,700 crore funding gap in UPI, against a government allocation of just Rs 2,000 crore. The committee, chaired by Bhartruhari Mahtab, said the current subsidy covers only 11% of industry costs, threatening investment in cybersecurity and fraud prevention.
The Finance Ministry told the panel it is weighing two options: restoring a merchant discount rate (MDR) for high-value transactions or a tiered incentive system to phase out government support. The ministry has clarified that any future MDR will be nominal and apply only to a limited set of merchant transactions, while consumer payments will remain free.
The Indian Opinion
Some fear UPI will become a paid service. But the government has repeatedly said the vast majority of transactions, especially small merchant and peer-to-peer, will stay free. The real test is whether a calibrated MDR on high-value payments can close the funding gap without pushing costs onto small businesses. If the tiered structure is transparent and the threshold set high, UPI’s growth need not suffer. The question is: what will that threshold be?
Sources (2): economictimes.indiatimes.com, timesnownews.com
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
