Politics · India Bureau
NITI Aayog's Kumar backs continued zero-fee UPI for several years
India should maintain its zero-fee UPI framework for at least a few more years rather than introducing merchant charges, according to NITI Aayog's former vice-chairman. Rajiv Kumar argued that the digital payment system should be treated as a public good with significant broader economic benefits.
LSN India ·
Rajiv Kumar, former vice-chairman of NITI Aayog, has urged the government to sustain its zero-fee UPI policy for several more years, cautioning against introducing transaction charges on merchants. Speaking to news agencies on Monday, Kumar said the scheme should only be reconsidered once India's currency-to-GDP ratio shows signs of meaningful decline, suggesting the government review the situation at that point.
Kumar characterized UPI as a public good that generates substantial positive externalities for the broader economy. He noted that the estimated Rs 20,000 crore annual cost borne by the public exchequer to maintain UPI infrastructure is justified by the system's overall benefits, which significantly exceed this expenditure.
The former policymaker's position reflects concerns about the composition of UPI transaction volumes. While 96 percent of individual transactions are below Rs 2,000, approximately 66 percent of the total transaction value exceeds this threshold, indicating a concentration of high-value payments on the platform. Kumar suggested that introducing fees could incentivize a shift of these higher-value transactions back toward cash payments, potentially undermining the government's digitalization objectives.
The remarks come amid ongoing discussions about UPI's sustainability and whether current operational models can be maintained long-term without cost-recovery measures from merchants or users.