As with any new tech-enabled framework, the implementation of e-RUPI must contend with challenges
Paresh Dhokad & Veenu Singh
While effective governance and inclusive institutions are cornerstones of economic growth, poor state capacity can lead to inefficiencies in public service delivery. However, India stands out amongst emerging economies for unleashing digital transformation in the public sector. A major step in this direction is the recently launched e-RUPI digital payment instrument, which is being touted as the effective solution to end leakage and targeting woes.
The e-RUPI, developed by the National Payments Corporation of India, is a one-time contactless and cashless voucher-based mode of payment, with the redemption of a voucher restricted to a specific individual for an intended purpose—a prepaid digital voucher delivered electronically to a beneficiary through an SMS or a QR code. The beneficiary can redeem vouchers at designated vendors and service providers in exchange for intended goods or services. So, what makes the e-RUPI a path-breaking initiative?
While the DBT system necessitates the beneficiary to have a registered bank account linked to Aadhaar card, all that the e-RUPI requires is a basic phone, without the need for any card or app or internet connection. With the service provider’s account credited only when the transaction is complete for its designated purpose, the possibility of diversion of funds to alternate uses is restrained. Instantaneous transfer arrangement ensures service providers are paid immediately without having to submit claims, thereby enhancing the availability of working capital. The e-RUPI, being a real-time payment system, is expected to reduce logistics costs of public service delivery and improve the marginal value of public funds through increased efficiency and impact.
Beginning of a revolution: Although piloted for health benefits, the e-RUPI can improve service delivery across sectors. As is the practice in the US, Sweden and Hong Kong, the government may use vouchers to provide scholarships to students in state schools, or issue skill vouchers that can be used to pay for vocational training at approved skill centres. Vouchers can also be employed to provide fertiliser subsidy using agri-vouchers, which eligible farmers can redeem at state-specified counters. Social vouchers could be a mechanism to deliver targeted public welfare to migrants and the marginalised, a need strongly felt during Covid-19. The e-RUPI payment system may be further extended to social security programmes—old-age pensions, unemployment benefits, insurance, etc.
Vouchers may even be used to reward income-tax payers; this has been proven to increase tax compliance. As in Japan and South Korea, the government may issue e-RUPI visit vouchers for archaeological monuments, national parks, heritage sites, and the like. These measures will nudge growth in allied sectors of the economy, in addition to bringing in increased tax revenues. The gains of the e-RUPI ecosystem are not restricted to public service delivery. The corporate sector, under CSR obligations, may choose to distribute food, shelter or medicine vouchers using the e-RUPI.
Possibilities and challenges: The e-RUPI payment system can enable central and state governments in effective targeting of their social benefits schemes. The government can monitor utilisation levels of vouchers in real-time, and can cap the limit on the maximum number of transactions or maximum amount of redemption per individual. Along with potential use-cases, e-RUPI transactions can generate tonnes of geo-tagged consumption information, collected through redemption apps and devices of service providers. This data can provide feedback to policymakers to fine-tune policies and take corrective action, if any. Real-time data can be used to analyse consumption patterns of public services in remote areas, north-eastern states and Aspirational Districts to make evidence-informed decisions. Once the government pulls away from being directly involved in service delivery, it can focus more on achieving and monitoring outcomes of its interventions.
As with any new tech-enabled framework, the implementation of the e-RUPI is riddled with challenges. The government should ensure the privacy of beneficiaries is not compromised and all information including personal identifiers is encrypted. A monitoring and analytics cell may be set up to concurrently analyse and evaluate the implementation and enhancement of the e-RUPI delivery architecture.
Public service delivery in India is on the cusp of a digital revolution. The e-RUPI is a shift away from the ‘business as usual’ approach to technology and is in line with the PM’s call for ‘Sabka Saath, Sabka Vikas, Sabka Vishwas’.
Authors are consultants, NITI Aayog