The government on August 2 launched e-RUPI, a cashless and contactless instrument for digital payment. e-RUPI vouchers are expected to play a big role in making Direct Benefit Transfer (DBT) schemes more effective given the apparent problems of leakage, low visibility and last mile delivery of welfare payments.
What is it
e-RUPI is a pre-paid voucher which can be used to avail specified government services. It is a QR code or SMS string-based e-voucher. So, it can be delivered to the mobile phone of the intended beneficiary, so the benficiary need not have a bank account. Since it is generated both as an SMS and a QR code, e-RUPI can be used even by those with a basic feature phone. Estimates suggest that there are close to 400 million feature phone users in India, who would ordinarily be kept out of any tech-heavy cashless digital payment solution since these require an Internet-enabled smartphone. With e-RUPI these users/beneficiaries can redeem the voucher without a card, digital payments app, or internet banking access. And the best part is, the uptake of any benefit can be tracked down to the very last mile.
e-RUPI can ensure the money is spent exactly on what it was given for — healthcare, food etc. Plus, the spending facility can be made time-bound to ensure no abuse/misuse. The National Payments Corporation of India (NPCI), which developed Unified Payments Interface (UPI) platform and the BHIM App, has developed e-RUPI.
Why is it important
Under direct benefit transfer regime, the government sends the beneficiaries money through their bank accounts. But many poor people do not have bank accounts. The Jan Dhan Yojana saw many bank accounts opened but the issue of not-so-poor people opening and or operating such accounts came to the fore.
Also the treatment meted out to the poor by banks was not exactly great everywhere.
The third issue is that welfare funds sent for buying food could be used for other purposes. e-RUPI hopes to obviate most of these problems. Beneficiaries need not rely on bank accounts and can access government benefits with a simple phone. There is no paperwork or signature requirement. Each e-RUPI transaction is a one-time thing.
So, the problems of benefits being siphoned off are rare. Queues, middlemen and touts are also avoided. At the time of use, an OTP will be required for proceeding with the e-RUPI payment and thus the intended beneficiary will be in control, mostly.
Why should I care
If successfully implemented, e-RUPI should make things better for both individuals and taxpayers.
As a tax payer, it is your money that is spent by the government on welfare schemes. With a targeted and specific system like e-RUPI, you would be getting more bang for your buck. Leakages cut to the minimum will mean that only intended beneficiaries get subsidies. This should help the government save money and fine-tune spending.
e-RUPI could be a harbinger to how economic benefits, not just government doles, will henceforth be passed on. Though e-RUPI is not a digital currency, its model can be used to deliver an economic benefit for a specific purpose to a specified beneficiary. In this way, the payer always has visibility over the beneficiary and benefit. Imagine a world where donations given by you online can be tracked down to the last paisa.
e-RUPI is a hop, skip and jump ahead of direct benefit transfers.
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