e-RUPI : Can it revamp India’s Public Distribution System?

Ever thought, what if the government gives us money for the vaccine instead of providing vaccines for free?

On the face of it, that seems like a nice idea. The government can have a fixed budget and will be free from its responsibility to vaccinate people. Also, people will have a choice for the vaccine they want; if someone can afford a better vaccine, they can add a few more bucks and have it.

Sounds cool, right? Seems as if it is a win-win situation, but you must take it with a pinch of salt. There is one edge case that needs to be taken care of; i.e., What if the money given is drained for personal use instead of getting vaccinated? And to be honest, at least some seepage is inevitable, isn’t it?

Vaccination is just an instance, there are a number of purposes for which the government may sometimes be willing to transfer money to people, but then the question arises, what if people misuse it? So, what’s the solution?

e-RUPI. This initiative, if successful, might change the way the Government’s public distribution system works. How do you ask? Read on to know.

What is e-RUPI?

An e-RUPI is basically a contactless and cashless digital payment solution. It is a prepaid redeemable voucher. The voucher would be shared with the beneficiary through the SMS string or a QR code on his mobile number. It is purpose-specific as well as person-specific. 

The Prime Minister indicated that e-RUPI will reduce the gap between the government and public, problems and services as well as system and facility. It is a safe and trustworthy method of payment and it will guarantee the users of targeted and leak-proof delivery of services.

It is developed by the National Payments Corporation of India (NPCI) along with the Department of Financial Services, the National Health Authority, and the ministry of health and family welfare.

How will the e-vouchers be issued and used?

The system has been prepared by the NPCI on its platform and the banks have also been linked with it. As of now, 11 banks are under this and more banks are expected to join soon. The user will be recognized through his aadhar linked mobile number. The voucher can only be used by the person who is allotted the voucher.

The e-RUPI could be used for medicines and a nutritious diet can be provided under various schemes like the mother and child welfare scheme. The government has stated that the e-RUPI vouchers may be used for various other sarkar yojanas government schemes such as fertilizer subsidiaries as well as Ayushman Bharat in the future. The private companies and employees may also use it for several other purposes like employee welfare schemes.

Till now, you would be very clear about the use of this kind of digital payment solution.

But you might still have many questions… What is the need for such technology when everything can be done by online payment options? What advantages does this kind of technology possess? Let's discuss these in detail now. 

Will e-RUPI succeed?

The major advantage that e-RUPI would possess is that as the vouchers would be generated by SMS strings or a QR code, a person doesn't need to have smartphones for using the service. You won’t need a credit card or a debit card, neither a mobile app and not even internet banking for the payment.

Plus, it is purpose-specific, and hence it can only be used for the purpose for which it has been issued. For example: Let's assume the government issues vouchers to a person for the education of his child. So he can’t use that voucher for his personal use and in this way, his child would not be deprived of education just because of his parents’ personal needs.

Another advantage is that it will give a new dimension to digital payments and it will allow the issuer to track and hence ensure that the money is spent on the assigned purpose rather than being wasted.

In short, misappropriation of government transfers can be prevented to a certain extent.

However, one big challenge is that, according to the data intelligence firm Data Reportal, one in every five Indians still doesn’t have a mobile phone. So being able to provide phones to a fifth of the population for accessing these kinds of digital services still remains a major concern for the government.

Taking cues from the globe...

In the United States of America, vouchers for schooling are being issued by the government to selected students for the creation of a targeted delivery system. Those are mostly subsidies that are given to the students for their specific purpose of education. A number of other countries such as Chile, Hong Kong, Sweden and Colombia also use these kinds of vouchers.

Maybe the GOI can take some cues from these countries and tackle the problems prevalent in India’s public distribution system.

The Bottom Line

Right now, you can’t say for sure how it might turn out to be. There are questions everywhere like.. Can it work efficiently? Can it be a game-changer for the way government and corporate support their citizens and employees? Can it work on highly scalable models? And many more such thoughts.

Well, all these questions can't be answered at this moment, but one thing that we can clearly say is that this move will open a lot of opportunities for the way we make payment for services.

What do you think? Tell us in the comments.