MINIMUM SUPPORT PRICE
1. Context
The Government of India has constituted a committee to look into the issues of minimum support price(MSP), Natural Farming, and Crop diversification.
2. What is Minimum Support Price (MSP)?
- MSP is the minimum price a farmer must be paid for their food grains as guaranteed by the government. They are recommended by the Commission for Agricultural Costs and Prices (CACP) and approved by the Cabinet Committee on Economic Affairs.
- The CACP submits its recommendations to the government in the form of Price Policy Reports every year.
- After considering the report and views of the state governments and also keeping in view the overall demand and supply situation in the country, the central government takes the final decision.
- Food Corporation of India (FCI) is the nodal agency for procurement along with State agencies, at the beginning of the sowing season.
The minimum support price (MSP) is set for 23 crops every year. They include:
- 7 cereals (paddy, wheat, maize, bajra, jowar, ragi, and barley)
- 5 pulses (chana, tur/arhar, moong, urad, and Masur)
- 7 oilseeds (rapeseed-mustard, groundnut, soya bean, sunflower, sesamum, safflower, and nigerseed) and
- 4 commercial crops (sugarcane, cotton, copra, and raw jute).
3. How MSP is Cauclated?
- MSP, presently, is based on a formula of 1.5 times the production costs.
- The CACP projects three kinds of production costs for every crop, both at state and all-India average levels.
- A2 covers all paid-out costs directly incurred by the farmer — in cash and kind — on seeds, fertilizers, pesticides, hired labor, leased-in land, fuel, irrigation, etc.
- A2+FL includes A2 plus an imputed value of unpaid family labor.
- C2: Estimated land rent and the cost of interest on the money taken for farming are added to A2 and FL.
- Farm unions are demanding that a comprehensive cost calculation (C2) must also include capital assets and the rentals and interest forgone on owned land, as recommended by the National Commission for Farmers.
4. The issue with the calculation of MSP
- To calculate MSP, the government uses A2+FL cost. The criticism of A2+FL is that it doesn’t cover all costs and that a more representative measure, C2, needs to be used.
- For example, in the 2017-18 rabi season, CACP data shows that C2 for wheat was 54% higher than A2+FL.
- The Swaminathan Commission also stated that the MSP should be based on the comprehensive cost of production, which is the C2 method.
5. Key Points about the Farmer's Demand
- After the recent decision to repeal three contentious farm laws, protesting farmer unions are now pressing for their demand of the legalization of the Minimum Support Price (MSP).
- They want a legal guarantee for the MSP, which at present is just an indicative or a desired price.
- Legalising MSP would put the government under a legal obligation to buy every grain of the crops for which MSPs have been announced.
- At present, the PM has announced the formation of a committee to make MSP more transparent, as well as to change crop patterns and to promote zero-budget agriculture which would reduce the cost of production.
- The entire issue of enforcing MSP legally is a tricky, complicated, and multidimensional one, involving lots of factors.
- Core demand: MSP based on a C2+50% formula should be made a legal entitlement for all agricultural produce. This would mean a 34% increase in the latest MSP for paddy and a 13% increase for wheat. MSP should also be extended to fruit and vegetable farmers who have been excluded from benefits so far.
6. The rationale behind the demand for legislation of MSP
- Farmers receive less than MSP: In most crops grown across much of India, the prices received by farmers, especially during harvest time, are well below the officially-declared MSPs. And since MSPs have no statutory backing, they cannot demand these as a matter of right.
- Limited procurement by the Govt: Also, the actual procurement at MSP by the Govt. is confined to only about a third of wheat and rice crops (of which half is bought in Punjab and Haryana alone), and 10%-20% of select pulses and oilseeds. According to the Shanta Kumar Committee’s 2015 report, only 6% of the farm households sell wheat and rice to the government at the MSP rates.
7. Why has the committee been set up?
- It has been constituted by the Ministry of Agriculture and Farmers Welfare as a follow-up to an announcement by the Prime Minister when he declared the government’s intention to withdraw the three farm laws.
- The protesting farm unions had demanded a legal guarantee on MSP based on the Swaminathan Commission’s ‘C2+50% formula’ (C2 is a type of cost incurred by farmers;). This was in addition to their demand for repeal of the three farm laws.
8. Committee on MSP, Natural Farming and Crop Diversification
On Minimum Support Price (MSP)
- To suggest measures to make MSP available to farmers by making the systems more effective and transparent,
- Give more autonomy to Commission for Agricultural Costs and Prices (CACP).
On Natural Farming: To make suggestions for programs and schemes for value chain development, protocol validation, and research for future needs and support for area expansion under the Indian Natural Farming System.
On Crop diversification:
To provide suggestions related to crop diversification including
- Mapping of existing cropping patterns of agro-ecological zones of producer and consumer states,
- Strategy for diversification policy to change the cropping pattern according to the changing needs of the country and
- A system to ensure remunerative prices for the sale of new crops.
9. Why have the protesting farm unions opposed this committee?
- Firstly, this committee includes members who supported the now-repeated farm laws.
- Secondly, the terms and references of the committee do not mention the legal guarantee to MSP. Instead, it mentions making MSP more effective and transparent.
10. Challenges associated with MSP
- Protest by Farmers: Farm unions have been protesting for more than six months on Delhi's outskirts, demanding legislation to guarantee MSP for all farmers for all crops and a repeal of three contentious farm reforms laws.
- MSP and Inflation: When announcing the MSP, inflation should be taken into account. But often the price is not increased up to the mark. For example, this time MSP for Maize has not even considered inflation then how it will benefit farmers! Also, frequent increases in the MSPs can lead to inflation too.
- High Input Costs: The input costs have been rising faster than sale prices, squeezing the meager income of the small farmers and driving them into debt.
- Lack of Mechanism: There is no mechanism that guarantees that every farmer can get at least the MSP as the floor price in the market. So proper mechanisms need to be fixed for all times to come.
- Restriction in Europe: Even after producing surplus grains, every year a huge portion of these grains gets rotten. This is due to the restrictions under WTO norms, that grain stocks with the FCI (being heavily subsidized due to MSP) cannot be exported.
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For Prelims: Minimum Support Price (MSP), World Trade Organisation (WTO), Commission for Agricultural Costs and Prices (CACP), Cabinet Committee on Economic Affairs, Food Corporation of India (FCI).
For Mains: 1. The Minimum Support Price (MSP) scheme protects farmers from price fluctuations and market imperfections. In light of the given statement, critically analyze the efficacy of the MSP. (250 Words)
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| Previous year Question
1. Consider the following statements: (UPSC 2020)
1. In the case of all cereals, pulses, and oil seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.
Which of the statements given above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
Answer: D
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Source: The Indian Express
BACHELOR OF SCIENCE FOR HUMANITIES AND COMMERCE
1. Context
Keeping in line with global norms and the National Education Policy (NEP) 2020, the country's higher education regulator is poised to introduce a new range of College degree names, including a Bachelor of Science (BS) degree in disciplines like arts humanities, Management and Commerce.
2. Key points
- Currently, the University Grants Commission (UGC) permits universities to offer a Bachelor of Arts (BA) degree in arts, humanities and social sciences, and a Bachelor of Science (more commonly abbreviated in India as BSc) degree is typically for science subjects.
- However, with the NEP 2020 advocating a restructuring of undergraduate and postgraduate degrees, a committee set up by the UGC to review degree nomenclatures has recommended that the new four-year undergraduate honours (or honours with research) degree programme, irrespective of the discipline, can also, be offered a Bachelor of Science (BS) degree.
- Similarly, universities can adopt the Master of Science (MS) nomenclature for both the one and two-year postgraduate programmes, even for disciplines such as arts, humanities, management and commerce.
- Although the committee has recommended using BS nomenclature for degrees across disciplines, it has not permitted the use of BA and MA for science programmes.
3. BA and BS for undergraduate programmes
- The UGC will soon share the five-member committee's recommendations in the public domain for feedback, following which the Commission will notify the fresh set of degree nomenclatures.
- The use of BA and BS for undergraduate programmes across disciplines is a prevalent practice abroad, where universities often offer, say, BA and BS degrees in Psychology or Economics.
- In such a case, the programme curriculum sets the BA degree apart from the BS.
- While a BS degree gives a student a more specialised education in the subject, a BA degree (in the same subject) provides more flexibility.
- The latter is designed with a broader choice of courses allowing the student to tailor his/her education to his/her interests.
4. Follows NEP roadmap
- SECTION 22 of the UGC Act empowers the Commission to notify degree nomenclature.
- The decision, which offers more flexibility to students, is in line with global norms and the National Education Policy (NEP) 2020.
- For instance, Harvard University offers both BA and BS degrees in engineering sciences.
The BA engineering student is required to earn fewer credits than the BS student and has greater flexibility to pursue her interests outside of engineering. - The BS degree, on the other hand, provides greater technical depth in the chosen engineering area.
- The committee's report was discussed during the UGC meeting held in the last week of May.
- After discussions, the Commission decided to publicly disclose its recommendations for feedback before finalising the new degree names.
5. Recommendations of the committee
- The formation of the five-member panel was a direct response to the NEP 2020, which proposed the introduction of a four-year undergraduate degree programme offering flexible entry and exit options, along with a one-year master's degree.
- Currently, undergraduate programmes, except for professional degrees such as engineering and medicine, typically are of three years, while mastering programmes extend over two years.
The committee has also made the following recommendations:
- The four-year undergraduate honours degree programme will include "Hons" in brackets, such as BA (Hons), BCom (Hons) or BS (Hons). Additionally, a four-year honours programme with research components will have "Hons with Research" in parentheses, like BA (Hons with Research) and BCom (Hons with Research).
- The notification of new degree nomenclatures will be an ongoing process. Universities can propose new degree names that are relevant to contemporary and emerging societal needs to the UGC. Upon approval, the higher education regulator will notify the new degree nomenclature.
- The committee recommends discontinuing the nomenclature of the "MPhil" degree, as per the NEP 2020's recommendation to scrap the MPhil Programme.
- If a student has earned all the required credits for a programme, he or she can be considered for the award of a qualification (such as a certificate, diploma, or degree) even before the completion of the programme's duration. For example, if a student has earned all the required credits for a four-year programme in 3. 5 years, he or she should be eligible to receive his or her degree.
- However, the committee clarifies that the new degree names will only apply prospectively and the old degree names will continue to be used even after the introduction of the new terminology.
- Therefore, the current three-year honours degree programme will continue alongside the four-year honours degree programme.
| For Prelims: National Education Policy (NEP) 2020, Bachelor of Science, University Grants Commission, Bachelor of Arts,
For Mains:
1. What is the Bachelor of Science in Humanities and Commerce? Discuss how the recommendations of the University Grant Commission Committee proposals on Four-year degree courses. (250 Words)
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Previous Year Questions
1. As per National education policy 2020, education must- (CTET Paper 1 2022)
(i) Be focused only on predetermined content
(ii) Focus on problem solving
(iii) Develop critical thinking among learners.
(iv) Be inquiry driven and discovery–oriented.
A. (ii), (iii), (iv) B. (i), (ii), (iii) C. (i), (ii), (iv) D. (i), (ii), (iii), (iv)
Answer: A
2. Which section of The University Grants Commission Act, 1956 describe the functions of UGC? (MPSC 2019)
A. Section-I B. Section-II C. Section-III D. Section-IV
Answer: C
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Source: The Indian Express
CYCLONE'S EFFECT ON MONSOON
1. Context
The impact of global warming on the monsoons are manifest in its onset, withdrawal, seasonal total rainfall, and extremes. Global warming also affects the cyclones over the Indian Ocean and the typhoons over the northwestern Pacific Ocean.
2. Formation of a cyclone
- We are seeing cyclone formations in the premonsoon cyclones season, closer to the monsoon onset, arguably due to the influence of a warmer Arctic Ocean on the winds over the Arabian Sea.
- The monsoon is of course also affected by the three tropical oceans- Indian, Atlantic, and Pacific Oceans- Indian, Atlantic, and Pacific the 'atmospheric bridge from the Arctic; and the oceanic tunnel as well as the atmospheric bridge from the Southern Ocean (a.k.a. the Antarctic Ocean).
- A 'bridge refers to two faraway regions interacting in the atmosphere while a 'tunnel' refers to two remote oceanic regions connecting within the ocean.
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Image Source: The Hindu
3. Global warming and Monsoon
- A drastic change in the monsoon rainfall intensity, duration, frequency, and spatial distribution can be attributed to Climate Change. However, it is too soon to conclude.
- If all this is in response to global warming then it can be permanent and might accelerate. If not then the monsoon system will revert to a more normal state.
- More data and reanalysis are needed to get a clear picture of the complete separation of the global warming impact from natural climate variability (Such as El Nino).
4. Why does a cyclone’s position matter?
- Some cyclones in the North Indian Ocean have had both positive and negative impacts on the onset of the Monsoon.
- Since the circulation of winds around the cyclones is in the anticlockwise direction, the location of the cyclone is critical as far as the cyclone's impact on the transition of the monsoon trough is concerned. (The monsoon trough is a low-pressure region that is a characteristic feature of the monsoons).
- For example, if a cyclone lies further north in the Bay of Bengal, the backwinds blowing from the southwest to the northeast can pull the monsoon trough forward, and assist in the monsoon's onset.
- Earlier this year, the Bay of Bengal had Cyclone Mocha develop in the first half of May and intensify briefly into a 'super cyclonic storm', before weakening rapidly upon landfall.
- Mocha's northwest-to-east trajectory over the Bay was the result of unusual anticyclones (which rotate clockwise) that have been parked over the Arabian Sea and the Bay of Bengal since March.
- Mocha dissipated on May 15 and the backwinds helped the monsoon set in on time over the Andaman and Nicobar Islands.
- One severe consequence of the anomalous anticyclones since March is that both the Arabian Sea and the Bay of Bengal have warmed by more than 1 degree Celsius in the premonsoon season.
- The late-season cyclone Biparjoy is still chugging along in the warm Arabian Sea and may well rapidly intensify i.e., have its wind speeds increase by 55 kmph within 24 hours before making landfall.
5. Impact of Monsoon on India
5.1 Positive
- About 64% of people in India depend on agriculture for their livelihood and agriculture itself is based on monsoon.
- The agricultural prosperity of India depends very much on timely and adequately distributed rainfall. If it fails, agriculture is adversely affected particularly in those regions where means of irrigation are not developed.
- Regional variations in monsoon climate help in growing various types of crops.
- Regional monsoon variation in India is reflected in the vast variety of food, clothes, and house types.
- Monsoon rain help recharge dams and reservoirs, which is further used for the generation of hydroelectric power.
- Winter rainfall by temperate cyclones in north India is highly beneficial for Rabi crops.
5.2 Negative
- The variability of rainfall brings droughts or floods every year in some parts of the country.
- Sudden monsoon burst creates a problem of soil erosion over large areas in India.
- In hilly areas sudden rainfall brings landslides which damage natural and physical infrastructure subsequently disrupting human life economically as well as socially.
6. Cyclones: Mawar, Biparjoy, and Guchol
- Cyclone Biparjoy is not interacting much with the monsoon trough at this time. However, its late birth, as well as the late onset of the monsoon, are both closely related to typhoons in the northwestern Pacific Ocean.
- On May 19, Typhoon Mawar was born and dissipated by June 3. Mawar qualified as a 'Super Typhoon' and is thus far the strongest typhoon to have taken shape in May. It is also the strongest cyclone of 2023 so far.
- Tropical storm Guchol is now active just to the east of the Phillippines and is likely to continue northwest before veering off to the northeast. These powerful typhoons are thirsty beasts and demand moisture from far and wind.
- Mawar pulled winds across the equator into the North Indian Ocean, setting up southwesterly winds over parts of the Arabian Sea and the Bay of Bengal. Southwesterly means blowing from the southwest.
- Southwesterly winds over the Arabian Sea are welcome news they bring large quantities of moisture onto the Indian subcontinent.
- On the other hand, southwesterly winds over the Bay of Bengal are bad news for the monsoon.
- The monsoon winds over the southern Bay of Bengal sweep in from the southwest and west, but they turn around and head northwest towards India from the Southwest.
- Winds were southwesterly over the entire bay when Mawar was active. This continues to be the case now due to Guchol, which has become a severe tropical storm now.
- Winds have been blowing strongly northeastward over the Bay, a key reason why the monsoon trough has been struggling to reach Kerala.
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For Prelims: Pre-monsoon cyclone season, Indian Ocean, Atlantic Ocean, Arctic Ocean, Bay of Bengal, El Nino, Global Warming and Mawar, Biparjoy, and Guchol.
For Mains: 1. Discuss the nature and origin of the Indian monsoon and recent techniques of its prediction. (250 words)
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Previous year Questions
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1. Consider the following statements: (UPSC 2012)
1. The duration of the monsoon decreases from southern India to northern India.
2. The amount of annual rainfall in the northern plains of India decreases from east to west.
Which of the statements given above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
Answer: C
2. With reference to the 'Indian Ocean Dipole (IOD)' sometimes mentioned in the news while forecasting the Indian monsoon which of the following statements is/are correct? (UPSC 2017)
1. IOD phenomenon is characterized by a difference in sea surface temperature between the tropical Western Indian Ocean and the tropical Eastern Pacific Ocean.
2. An IOD phenomenon can influence an EI Nino's impact on the monsoon.
Select the correct answer using the code given below:
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
Answer: B
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Source: The Hindu
CYCLONE BIPARJOY
1. Context
A cyclonic storm, named Biparjoy, has developed in the Arabian Sea. On Thursday (June 8 2023) afternoon, it was stationed about 850 km west of Goa and 900 km southwest of Mumbai. The cyclone is predicted to gain in strength over the next three days and develop into a very severe cyclonic storm by June 13 2023.
2. About Cyclone Biparjoy
- According toan Indian Meteorological Department (IMD) advisory on Thursday (June 8), the cyclone would result in squally weather with wind speeds reaching 35-45 kmph along the coastline of Karnataka, Goa and Maharashtra
- Cyclone is expected to keep the monsoon a little subdued. The IMD announced the onset of the monsoon on the Kerala coast
- According to IMD monsoon could progress to some more parts of central Arabian Sea, remaining parts of Kerala, some parts of Tamil Nadu, some parts of Karnataka and some parts of the northeastern states
- ‘Biparjoy’ was suggested by Bangladesh and the word means ‘disaster’ or ‘calamity’ in Bengali
- The naming of cyclones is done by countries on a rotational basis, following certain existing guidelines
3. Meteorological Centres
- Worldwide, there are six regional specialised meteorological centres (RSMCs) and five regional Tropical Cyclone Warning Centres (TCWCs) mandated for issuing advisories and naming of tropical cyclones
- IMD is one of the six RSMCs to provide tropical cyclone and storm surge advisories to 13 member countries under the WMO/Economic and Social Commission for Asia-Pacific (ESCAP) Panel including Bangladesh, India, Iran, Maldives, Myanmar, Oman, Pakistan, Qatar, Saudi Arabia, Sri Lanka, Thailand, United Arab Emirates and Yemen.
- RSMC, New Delhi is also mandated to name the Tropical Cyclones developing over the north Indian Ocean (NIO), including the Bay of Bengal (BoB) and the Arabian Sea (AS)
- So, the tropical cyclones forming over different Ocean basins are named by the concerned RSMCs & TCWCs
4. Names of Cyclones
The WMO/ESCAP Panel on Tropical Cyclones in 2000 agreed in principle to assign names to the tropical cyclones in these seas
This list contained names proposed by then eight member countries of WMO/ESCAP PTC, viz., Bangladesh, India, Maldives, Myanmar, Oman, Pakistan, Sri Lanka and Thailand
It was expanded to include five more countries in 2018 — Iran, Qatar, Saudi Arabia, United Arab Emirates and Yemen
The list of 169 cyclone names released by IMD in 2020 was provided by these countries — 13 suggestions from each of the 13 countries
Some rules are to be followed while naming cyclones, such as:
- The proposed name should be neutral to (a) politics and political figures (b) religious believes, (c) cultures and (d) gender
- Name should be chosen in such a way that it does not hurt the sentiments of any group of population over the globe
- It should not be very rude and cruel in nature
- It should be short, easy to pronounce and should not be offensive to any member
- The maximum length of the name will be eight letters
After Bangladesh, the next cyclone will be named ‘Tej’ based on India’s suggestion
5. Cyclones in Arabian sea and Bay of bengal
- There are fewer number of cyclones in the Arabian Sea than the Bay of Bengal, but it is not uncommon
- In fact, June is one of the favourable months for the formation of cyclones in the Arabian Sea
- A cyclone is a low-pressure system that forms over warm waters.
- Usually, a high temperature anywhere means the existence of low-pressure air, and a low temperature means high-pressure wind
- In fact, that is one of the main reasons why we see greater number of cyclones in the Bay of Bengal compared to Arabian Sea
- Bay of Bengal is slightly warmer. Because of climate change, the Arabian Sea side is also getting warmer, and as a result, the number of cyclones in the Arabian Sea is showing an increasing trend in the recent trend
6. Cyclone formation
- As air warms over hotter regions, it ascends, leading to low pressure at the surface it is covering
- When air cools in colder areas it descends, leading to high pressure at the surface
- In a depression or low-pressure situation, the air is rising and blows in an anticlockwise direction around the low in the northern hemisphere and in a clockwise direction in the southern hemisphere
- This is because of the Coriolis effect, a result of the earth’s rotation on its axis.
- As warm air rises and cools, water vapour condenses to form clouds and this can lead to rains
- Weather systems formed over the Bay of Bengal in the peak of summer in May are among the strongest in the North Indian Ocean region
- Warm seas present ripe conditions for the development and strengthening of cyclones and fuel these systems over the water
- Storms intensify and sustain depending on the energy availability through heat load in oceans and moisture
- Historically, the Bay of Bengal has been known for tropical cyclones. But over the years there has been an increase in cyclones forming in the Arabian Sea, as well
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For Prelims: Cyclones, Formation of Cyclones, IMD
For Mains: 1.What is a tropical cyclone? Discuss the formation of cyclone (250 words)
2. Cyclones are more in Bay of bengal than in Arabian sea. Comment (250 words)
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Source: indianexpress
LIMITS ON UPI TRANSACTIONS
1. Context
- As transactions facilitated by the Unified Payments Interface (UPI) breach record highs, banks have opted for daily limits.
- These are over and above the already imposed ceilings mandated by the facilitator, the National Payments Corporation of India (NPCI), in 2021.
- The idea is to sustain the smoother functioning of the payments interface as it continues to acquire popularity.
2. Conversation about daily limits
- At present, users can make up to 20 transactions or ₹ 1 lakh in a single day either all at once or throughout the day.
- For certain specific categories of transactions such as the capital markets, collections (such as bills, among others), insurance and forward inward remittances, the limit is ₹ 2 lakh.
- In December 2021, the limit for the UPI-based ASBA (Application Supported by Blocked Amount) IPO and retail direct schemes was increased to ₹ 5 lahks for each transaction.
- The conversation now revolves around banks and apps coming up with their guidelines for transactions.
- For example, state-run lenders Punjab National Bank (PNB) and Bank of Baroda have set their transaction limit at a much lower ₹ 25, 000.
- PNB's daily limit is ₹50, 000.
- As for apps, among others, Google Pay users breach the daily limit if they try to send money more than ten times in a single day across all UPI apps.
- As the payments interface looks to expand its footprint (recall the boarding of nonresident accounts having international numbers into the ecosystem) and its growing utility in daily lives, limits would help maintain an essential security infrastructure and its seamless functioning.
- This is also important as the interface looks to expand its use case, as also called for in the proposed pilot project for coin vending machines with UPI as the facilitator.
3. Limits on transactions
- The limits are set to balance out customer convenience and potential fraud/risk concerns.
- The NPCI has also increased the value limit in specific categories where the average transaction value is higher such as Capital Markets or Credit Card bill Payments.
- As for the moves impacting future growth, "All the ecosystem participants, the NPCI and the regulator regularly review the transaction and value limits on UPI and implement the required changes where the need exists referring to the higher limits for IPOs, Broking, Mutual Funds, Loan repayment etc.
4. Concerns on UPI
- In May 2023, the total number of transactions facilitated using UPI increased to 9 415.19 million.
- The combined value of such transactions also increased at a largely similar ₹ 14.89 lakh crore.
- The segregation in terms of P2P (peer-to-peer) and P2M (Peer to Merchant) is particularly interesting.
- In terms of volume, whilst P2P accounted for about 43 per cent at 4, 045.48 million in terms of value its share scaled up to ₹11.45 lakh crore.
- In the P2P category, the majority of the transactions were in the below ₹500 bracket (54.2 per cent) whilst in the P2M category, the share in the same amount bracket stood at 84.3 per cent.
- This indicates its lower-down utility.
- Important to note that considering the varied nature of merchants and businesses, the nature of transactions can be categorised in favour of one whilst it should be on the other side.
- However, important to note in this context, until February of the financial year 2022-23, the total number of reported UPI frauds had also increased by about 13 per cent in comparison to the previous financial year to 95, 402.
- However, this was alongside a decline in fraud to sales ratio at 0.0015 per cent.
- Thus, to combat the growing incidences, there is an imperative need to safeguard infrastructure in a growing ecosystem.
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For Prelims: Unified Payments Interface, National Payments Corporation of India, Application Supported by Blocked Amount, IPO, Google Pay, Punjab National Bank, Capital Markets, Mutual Funds, Loan repayment, P2P, P2M,
For Mains:
1. What is Unified Payments Interface (UPI)? Discuss the need for limits on UPI transactions. (250 Words)
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Previous Year Questions
1. Which of the following is a most likely consequence of implementing the 'Unified Payments Interface (UPI)'? (UPSC 2017)
A. Mobile wallets will not be necessary for online payments.
B. Digital currency will totally replace the physical currency in about two decades.
C. FDI inflows will drastically increase.
D. Direct transfer of subsidies to poor people will become very effective.
Answer: A
2. With reference to digital payments, consider the following statements: (UPSC 2018)
1. BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
2. While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.
Which of the statements given above is/are correct?
A. 1 only B. 2 only C. Both 1 and 2 D. Neither 1 nor 2
Answer: A
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Source: The Hindu
