Prime Minister Narendra Modi on Monday launched a new digital payment system which can ensure financial aid—whether state benefits or charity by individuals and organisations–given to beneficiaries will be used only for the intended purpose.

The e-Rupi payment system developed by the National Payment Corp. of India (NPCI) is a cashless and contactless instrument for digital payment. Using this, funds can be sent to a beneficiary’s mobile phone for a specific purpose in the form of a quick response code or a short message service (SMS) based e-voucher. This can be used to purchase specified goods or service, ensuring that the funds are meant for the intended purpose.

“If someone wants to help then, instead of cash, e-Rupi could be given. This will ensure that the money given will be used for the intended purpose,” the Prime Minister said.

Modi said that this was a futuristic reform, adding that in the initial phase, this payment system is being used in the case of benefits in the health sector.

This payment system has the potential to transform the way the government pays fertilizer subsidies. After implementing direct benefits transfer in the case of cooking gas, scholarships and a host of other benefits, the government is keen for implementing the same in the case of fertilizers. At present, fertilizer subsidy is transferred to the manufacturer based on transaction details captured in a point-of sale device at the time of the sale. E-Rupi could enable the government to deliver the benefit directly to the farmer in the form of vouchers which could be redeemed to buy fertilizers. Use of point-of-sale device and neem coating of urea have already helped in reducing the diversion of the subsidised commodity.

DBT has helped the government to prevent leakage of subsidies in a big way. Modi said that more than 300 schemes are using DBT and more than 17.5 trillion have been transferred directly to the accounts of people via DBT. “The biggest benefit of this all is that Rs. 1.78 trillion is prevented from going to the wrong hands, ” the Prime Minister said.

Modi said the development of digital payment infrastructure in the country has empowered the poor, small businesses, farmers and tribal population. This can be felt in the record of 300 crore UPI transactions in July amounting to 6 trillion, said Modi.

The new payment system will also help NGOs and corporations in their charitable activities. If an organisation, wants to vaccinate 100 people in a private health facility, then e-RUPI voucher could be given which will make sure the fund is utilised for vaccination itself, the Prime Minister explained. Modi also cited possible uses in other areas such as assistance towards food, books, uniform or fertilizers.

An official statement from the government pointed out how e-Rupi is expected to help in leak-proof delivery of welfare services. This can be used for delivering services under schemes meant for providing drugs and nutritional support under mother and child welfare schemes, tuberculosis eradication programmes, drugs and diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertilizer subsidies etc, said the statement. Even the private sector can leverage these digital vouchers as part of their employee welfare and corporate social responsibility programmes, the statement said.

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