📑 Contents

Question 43

Which of the following is a most likely consequence of implementing the 'Unified Payments Interface (UPI)'?

AOptions

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.

BSolution

The Unified Payments Interface (UPI) is an instant real-time payment system developed by the National Payments Corporation of India (NPCI) facilitating inter-bank peer-to-peer and person-to-merchant transactions. While UPI does simplify online payments and might reduce reliance on some traditional mobile wallets (Option A), and contributes to digital transactions, it is unlikely to totally replace physical currency in two decades (Option B) or directly lead to a drastic increase in FDI (Option C). A significant and direct consequence of widespread digital payment systems like UPI is the increased efficiency and transparency in direct benefit transfers (DBT). By enabling direct, instant transfers to bank accounts, UPI makes the distribution of subsidies to beneficiaries significantly more effective, reducing leakage and delays.

CStrategy

For questions on technology or economic reforms, analyze the direct and immediate impacts of the innovation. Consider the stated goals and practical applications. Avoid options that make extreme or long-term predictions unless strongly supported.

DSyllabus Analysis

This question falls under Indian Economy and Science & Technology, specifically digital payment systems and their socio-economic impact.

EQuestion Analysis

Medium. Requires understanding the practical implications of UPI.