The Union Cabinet approved ₹1,500 crore allocation to promote low-value UPI transactions, offering 0.15% incentives for transactions up to ₹2,000. The goal is 200 billion transactions by FY25. Some industry players deem the allocation inadequate. ...
By ET Bureau | Updated:
Agencies
New Delhi: The Union Cabinet Wednesday approved an allocation of ₹1,500 crore to continue promoting low-value UPI transactions. Under the 'Incentive Scheme for Promotion of Low-Value BHIM-UPI Transactions (P2M)' small merchants will continue to receive a 0.15% incentive on UPI transactions up to ₹2,000 for FY25.
Per NPCI, merchant discount rate or MDR up to 0.30% of transaction value is applicable for UPI person to merchant transaction. Since January 2020, to promote digital transactions, MDR was made zero for RuPay Debit Cards and BHIM-UPI.
The government said the scheme will help achieve the target of 200 billion transaction volume in FY25.
Some industry players said the allocation is insufficient. "The only solution is for the government to allow us to charge a low controlled MDR of 25 bps on UPI P2M transactions only for merchants with more than ₹40 lakh turnover," said Vishwas Patel, Joint MD of Infibeam Avenues and Chairman of Payment Council of India. With zero MDR and the government allocating a paltry ₹1,500 crore for processing transactions of ₹246.82 lakh crore in 2024 to the entire ecosystem is just not going to be enough, he added.
Separately, the finance ministry informed a parliamentary committee on demands for grants that for BE 2025-26, the incentive data under the scheme for Q4 FY25 will be available only after March 2025. "To meet the expected expenditure for Q4, an amount of ₹435 crore is required in FY26," it stated.
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Greenfield Highway
The Cabinet also approved the construction of a six-lane access controlled greenfield national highway in Maharashtra to be developed on build, operate and transfer (BOT) mode at a cost of ₹4,500.62 crore.
Other Decisions
The Cabinet also approved a new 12.7 lakh tonne brownfield ammonia-urea complex within the existing premises of Brahmaputra Valley Fertilizer Corporation Limited in Namrup, Assam. The project will cost ₹10,601 crore. In another proposal, it approved a revised Rashtriya Gokul Mission to boost livestock sector growth.
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The Revised National Program for Dairy Development also got the approval at an additional ₹1,000 crore cost, bringing the total budget to ₹2,790 crore for the period of the 15th Finance Commission cycle.
