In 1983, the idea of digital cash was introduced, in a research paper by David Chauman. Since then the digital currency has evolved subsequently and rationalised the current financial infrastructure of a particular country. In India, the concept of digitalisation was brought into the picture in 2015 to improve the online infrastructure, hence the National Payment Corporation of India (NPCI) launched United Payment Interface (UPI) in 2016 for public use, and currently has over 10 crore monthly active users, and staggering success as an interoperable mobile banking system, which in the year 2021 laid another stone in the form of e -RUPI (portmanteau of electronic Rupee and UPI). However the question remains, with this recent innovation of NPCI in the form of e-RUPI, will this be a turning point that goes beyond digital currency, or is it just another policy incrementalism?
National Payments Corporation of India (NPCI) in association with the Department of Financial Services (DFS), National Health Authority (NHA), Ministry of Health and Family Welfare (MoHFW), and partner banks, has launched an innovative digital solution – ‘e-RUPI’. The first step towards having a digital currency in the country is a person-specific and purpose-specific payment system. This is a cashless and contactless digital payment system that will be delivered in the form of vouchers to respective beneficiaries in the form of a QR Code or SMS-string. We can understand this by taking the Amazon shopping voucher as an example, where an individual pays a certain amount of money to amazon and creates a voucher in exchange for someone else to use specifically in amazon. It is emerging as a symbol of progressive India which connects people with technology leading to an effective Direct Benefit Transaction (DBT) leading to a new dimension of digital governance.
The government of India initiated e-RUPI with the objective of targeted, transparent, and leak-proof delivery of welfare services. The private sector can leverage such vouchers to provide employee welfare schemes and meet their corporate social responsibility. For instance, the government may issue an e-RUPI voucher as a subsidy provided to the farmers for the purchase of certain seeds instead of a monetary bank transfer. This will ensure that the subsidy voucher is utilised effectively to meet the specific requirement, which in case of a monetary transaction is not guaranteed. Similarly, the Corporate sector can issue e-RUPI to meet the hotel and travel expenses of their employees incurred during outstation business visits, instead of demanding proof of expense.
The significance of e-RUPI was to highlight the potential gaps in digital payment before we proceed with Central Bank Digital Currency to understand the ubiquitousness and impact of this voucher-based payment system amongst the unbanked citizens of India and identify the region where digital infrastructure is inadequate or unavailable.
When we discuss the availability of such a system globally, in the US specific students selected for state-funded education are provided with education vouchers or school vouchers which ensure a targeted delivery system. These are subsidies given to the parents of the students to meet the specific purpose of educating their children, which have also been implemented in countries like Hong Kong, Chile, and Sweden, among many others.
The awareness and curiosity which has been guided by e-RUPI heralds the digitisation of India’s financial stock and provides an edge to further innovations by NPCI in subsequent years. One of the elements of e-RUPI is to act as a link between the proposed digital currency, slated to be distributed in the fiscal year 2023, which would eventually provide momentum toward a digital economy. As the definition of banknote is being enhanced to include currency in digital form since the launch of CDBC, it will examine how the-rupee and e-RUPI co-exist in this digitalised economy or is e-RUPI, a voucher system ahead of RBI’s digital currency?
The awareness and curiosity which has been guided by e-RUPI heralds the digitisation of India’s financial stock and provides an edge to further innovations by NPCI in subsequent years. One of the elements of e-RUPI is to act as a link between the proposed digital currency, slated to be distributed in the fiscal year 2023, which would eventually provide momentum toward a digital economy. As the definition of banknote is being enhanced to include currency in digital form since the launch of CDBC, it will examine how the-rupee and e-RUPI co-exist in this digitalised economy or is e-RUPI, a voucher system ahead of RBI’s digital currency?
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