In the global digital economy, two major forces are broadly dominating, i.e. GAFAM (Google, Apple, Facebook, Amazon, Microsoft) and BATX (Baidu, Alibaba, Tencent, Xioami). Both GAFAM and BATX focus on e-commerce and digital trade. But, our existence is under threat, the challenges like COVID–19 and climate change killing people across borders, but we are so ignorant that we are busy negotiating petty benefits. By 2030, we need 50 per cent more food, 45 per cent more energy, 50 per cent reduction in CO2 emissions to survive. To speed up the implementation and delivery of a sustainable development goal to solve these existential threats, cross-border electronic cooperation can play a vital role. E.g. Bharat’s Cowin App can be used to eradicate deadly diseases like AIDS and malaria.
Sanatani Digital Economy
Sanātani Digital Economy subverts the global digital economy paradigm by unveiling powerful digital public goods (DPG) like UPI, Aadhaar, CoWin, and ONDC. Sanātana means ‘eternal’.
UPI processes 40 per cent of global real-time payments. A mammoth 1.2 billion or about 120 crores people have been enrolled in the Aadhaar scheme, bringing nearly 89 per cent of India’s population under the Aadhaar net and making it the world’s largest biometric database. India crossed the mark of administering two billion vaccinations in July 2022, including doses one, two and precaution doses. As on January 2023, there are more than one billion registrations on the CoWIN Portal,
Journey of UPI
- UPI was developed by the National Payments Corporation of India (NPCI) and regulated by the Reserve Bank of India (RBI)
- It is built over the Immediate Payment Service (IMPS) infrastructure and allows people to instantly transfer money
- UPI allows 24 X 7 transfer of money through mobile devices
- Since 2016, UPI has recorded more than 8,600 million transactions in over 14 lakh crores in value as of March 2023
- Market share of UPI has increased from 2 per cent in 2016-17 to 52 per cent in 2021-22
- The growth of unique users has increased, reaching over 300 million users by the end of 2022
- As of June, 2022, there were over 50 million merchants on the UPI network
- UPI handles 75 per cent of the retail digital payments volume in India
- The adoption of UPI has increased at a compounded annual growth rate (CAGR) of 380 per cent and 314 per cent in transactions volume and value
- According to RBI, UPI transactions reached a total of Rs 139.2 trillion in FY 2022-23
- In April 2023, UPI transactions reached Rs 8.9 billion, with a total transaction value of Rs 14.07 trillion
- In 2022, UPI clocked over 74.05 billion transactions in volume and 126 trillion in terms of value
If Modi – the Chanakya of Digital Arthaniti – gets another term, GAFAM and BATX may become a subset of “The Sanatani Digital Economy.” One trend to support this claim is that Google has announced investment of $10 billion in India and open its global fintech operation centre at GIFT City (Gujarat International Finance Tec-City).
UNIVERSAL UPI
As of June 2023, UPI transaction volume is clocked at 9.33 million, and the total value of UPI transactions for June touched Rs 14.75 lakh crore. Not just countries but multilateral institutions are queuing up for UPI. India had signed a memorandum of understanding (MoU) with 13 countries that want to adopt the UPI interface for digital payments. Further, an official release said that The Universal Postal Union will evaluate UPI for integrating the unified payment interface with cross-border remittances using the global postal network. Director General of Universal Postal Union (DG UPU) Masahiko Metoki was on a three-day visit to India to inaugurate the UPU Regional Office. He also met Minister of Communications, Electronics and IT Ashwini Vaishnaw.
The biggest selling point for UPI internationally is that it could accelerate and reduce the cost of cross-border transactions to and from India – the world’s top remittances market
United Nations International Computing Centre’s (UNICC) Director Sameer Chauhan stated that “India’s Unified Payments Interface (UPI) infrastructure could be an inspiration for a global not-for-profit payment system for refugees”. “During the war in Ukraine, UNHCR (United Nations High Commissioner for Refugees) issued monthly payments to refugees using debit cards but faced challenges like lost cards and limited access to funds. So, in late 2022 we (UNICC) successfully piloted a crypto-based solution where refugees with mobile phones received crypto payments tied to US stablecoin. However, India’s UPI infrastructure could be the inspiration for a global not-for-profit payment system for refugees,” Chauhan said.
MODI – THE CHANAKYA OF DIGITAL ARTHANITI
As the world’s fastest-growing economy, India wants to de-couple its monetary and trade policies from external risks. The biggest selling point for UPI internationally is that it could accelerate and reduce the cost of cross-border transactions to and from India, the world’s top remittances market. According to the World Bank, India’s remittances surpassed US$100 billion in 2022, the greatest of any nation globally and considerably ahead of No. 2 China and No. 3 Mexico.
UPI’s patron the National Payments Corporation of India (NPCI), may aim to establish a homegrown alternative to SWIFT: less expensive payment flows between India and the world on the country’s digital payment rails. Normally, it costs Indians $13 to send $200 back home. There is no transaction fee for using UPI, in any case.
Key Benefits
Low Transaction Fees
The low transaction fees associated with UPI is another benefit for suppliers and owners of small businesses. Credit cards and debit cards, two common forms of payment, can have expensive transaction fees, especially for small businesses. The transaction costs are often substantially cheaper using UPI. The maximum transaction fee has been fixed by NPCI at Rs. 0.30 per transaction for transactions up to Rs. 1,000 and Rs. 0.60 per transaction for transactions beyond Rs. 1,000 as of September 2021.
Real-Time Processing
Due to the real-time nature of UPI payments, small firms may quickly receive payments. Small vendors and retailers that need to manage their cash flow and have rapid access to funds should pay particular attention to this aspect. With UPI, there are no middlemen or processing delays because the money is sent directly from the customer’s bank account to the vendor’s bank account. This enables small business owners to handle their money more effectively and steer clear of cash flow problems.
Security
Traditional payment systems frequently fail to provide the same degree of security as UPI. Each UPI transaction is authenticated by a distinct UPI PIN, assisting in the reduction of fraud and unlawful transactions. The user sets a UPI PIN during registration, which is necessary for all transactions. By adding another layer of protection, this makes sure that only permitted transactions are carried out. Moreover, UPI payments are performed through secure channels, guaranteeing that the information related to the transaction is protected.
The bilateral partnership with France and other nations like Singapore and UAE is an important step in making UPI global. A substantial part of payment network revenues originates from cross-border transactions. Visa and Mastercard have a treasury that helps process cross-border transactions competitively. But NPCI doesn’t have a treasury of its own. The core transactions are still processed via bank-to-bank cross-border transfers through the conventional method. Therefore, for UPI to be successful, NPCI should have its treasury to compete directly with international networks on cross-border payment acceptance. GIFT city should be the base of NPCI’s treasury.
GEO-ECONOMICS – 3C’S TO BOOST UPI
Chanakya niti says: Money is the root of all work. Thus, UPI should become integral to commerce, culture and cricket (3C’s). Regarding commerce, India should try to include UPI in our FTA dialogues. Further, the Indian software industry should be incentivised to promote UPI among their overseas business and employees. Regarding culture, like Bollywood popularised Hindi in the Western world, Bollywood-Tollywood and all Indian film industry should be incentivised to promote UPI among their overseas business and employees. Indian sports industry surpasses Rs 14,000 crore. Cricket continued to drive growth in the sports industry, contributing 85 per cent to overall sponsorship spending in 2022.
“India has developed a world class digital public infrastructure to support its sustainable development goals with its journey having lessons for other nations embarking on their own digital transformation”-International Monetary Fund (IMF)
Recently considering UPI’s success, Fortune magazine stated: “As Silicon Valley fantasises about Web3.0, India leaps ahead on payments”. UPI is doing specifically what blockchain is invented to do by cutting out mediators and by creating (for now, at least) a payment instrument free of transaction fees
AATMANIRBHARTA AND ATMASURAKSHA
As the world’s fastest-growing economy, India wants to de-couple its monetary and trade policies from external risks. UPI, with its treasury, will make Bharat Aatmanirbhar (self-sufficient).
Further, UPI will boost Bharat’s Atmasuraksha by:
Increased Transparency: By moving towards digital payments, the traceability of the payment process is improved. First, recipients have digital records of the amount of payments they are to receive. Second, digital payments generally require more stringent identification and documentation, making it harder for ghost recipients to remain undetected.
Decrease in Crime Rate: Many anti-social and illegal activities like drug trafficking, money laundering and terror financing are carried out in cash. With increased digital transactions, it will be difficult for such anti-social and anti- national elements to carry out nefarious operations.
In conclusion, Modi – the Chanakya of Digital Arthaniti – is silently building a mammoth “Sanatani Digital Economy”, subverting the myopic vision of the global digital economy focused on e-commerce. And UPI is Modi’s Digital Ashwamedha marching ahead invincibly.
