Context:
The Union cabinet announced an incentive scheme for Unified Payments Interface (UPI) payments of less than ₹2,000 for 2024–25 with an outlay of around ₹1,500 crore. Banks will get a 0.15% incentive, one fifth of which will be incumbent on adequate performance of their infrastructure over the year. The incentive will be paid out in the case of payments to small merchants.
Features of UPI Incentive Scheme 2024-25
- Incentive rate
- 0.15%for each qualified transaction to the banks.
- Performance linked component
- 20% of that incentive will be dependent on the banks keeping robust infrastructure for their performance standards up to par.
- Transaction limit
- The maximum ceiling would only be for lesser payments within ₹2,000; no incentives would be paid on higher payments.
- Target Audience
- Facilitate the small merchants using UPI payments without charging payouts that involve merchant discount fees(MDR).
Importance of This UPI Incentive Scheme
- As of now, UPI payments do not attract merchant fees, like debit and credit cards, hence digital infrastructures are not cost effective for banks and merchants to invest in.
- The incentive will be paid to banks and will encourage merchants to increase their acceptance of UPI for smaller amounts.
- Cost free digital offerings for the smaller merchants, diminishing dependence on cash transactions.
Government Digital Payments Strategy
- To achieve a target of ₹20,000 crore through UPI transaction volumes in the coming FYs 2024 25.
- During FY 2023 24, the government has spent ₹3,631 crore in incentive disbursement to banks, which is more than the last two years combined.
- It also covers RuPay debit card transactions, which promote the NPCI as a home grown alternative to Visa and Mastercard.
Other Cabinet Decisions
Greenfield National Highway in Maharashtra
- Approval for a six-lane access-controlled greenfield highway in Maharashtra.
- Project to be developed on Build, Operate and Transfer (BOT) model.
- Estimated cost: ₹4,500.62 crore.
Brownfield Ammonia-Urea Plant in Assam
- Approval for a 12.7 lakh tonne ammonia-urea complex at Brahmaputra Valley Fertilizer Corporation Limited, Namrup, Assam.
- Project cost: ₹10,601 crore.
Revised Rashtriya Gokul Mission
- Focus on livestock sector growth with enhanced measures for cattle productivity and indigenous breed promotion.
Revised National Program for Dairy Development
- Additional allocation of ₹1,000 crore, bringing the total project budget to ₹2,790 crore for the 15th Finance Commission period.
The UPI incentive scheme for FY 2024 25 reflects the ongoing governmental initiative toward a cashless economy while yet maintaining fiscal prudence in the growth of digital payments. Special attention to small merchants and banks is intended to further deepen digital penetration in India’s economy.
Source: TH
