. UPI 2.0 LAUN CHE D
Why in news?
Recently, National Payment Corporation of India (NPCI) has upgraded the Unified Payment Interface (UPI) with enhanced features.
New features in UPI 2.0
• Linking of overdraft account – Apart from the savings and current accounts, the UPI users can now link their overdraft account to it and all the facilities and benefits of overdraft account would be made available to the users.
About NPCI
• It is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007
• It is the umbrella organization for all retail payments and settlement systems in the country.
• It also manages the UPI platform
• It links all the ATMs in India
23 ©Vision IAS
• One-time Mandate (account blocking) – It allows customers or merchants to pre-authorize a transaction and pay at a later date. It would also ensure that the customers do not miss the payments.
• Invoice in the inbox – It allows the users to check the invoice sent by merchant in their own inbox prior to making the payments, thus allowing the customers to check the credentials beforehand.
• Security Layer in QR – The app allows the users to scan the QR code and check the authenticity of the merchants through notification to the user to ascertain the information.
• Increased Transaction Limit – The pre-existing transaction limit (1 lakh daily) has been raised to 2 lakh daily.
Challenges
• Even though the transaction limit has been raised to 2 lakh but certain banks still have limits much lower than 1 lakh while individual app such as BHIM, Whatsapp etc. have even lower limits.
• There is also lack of initiatives from banks for penetration of QR Codes for UPI whereas wallets have aggressively placed their stickers.
• The invoice in the inbox may have a deeper security risk as it may be accessible to anyone with the link which could lead to increased and unnecessary data harvesting.
• The overdraft feature of the UPI 2.0 may also lead to over-spending leading to banks charging the account holders.
• UPI 2.0 also doesn’t have a grievance redressal mechanism that would ensure refund of failed transactions in a reasonable time period.
• The ‘standing instruction’ feature that would allow recurring payments from the user’s bank account towards loan payment or bill payment after a specific interval, enabled by a one- time digital mandate need to be included to tap Rs 9 lakh crore worth of bill payments market which is still dominated by cash
3.6. PR OPOSAL FOR CI TY -LE V E L GDP
Why in News?
Recently, Ministry of Housing and Urban Affairs (MoHUA) commissioned The Economist Intelligence Unit (EIU) to evaluate methodologies for calculating city-level gross domestic product (GDP), and to assess their applicability to India.
Various Approaches used in calculating City level GDP
• “Top-down” approaches: These are essentially used in city-to-state/region or city-to-country ratios to estimate city-level GDP, using existing national or state-level GDPs. Some of these estimates are for specific regions or metropolitan areas, although the concept remains valid for the smaller city unit. For instance, it uses population data to estimate output generated in a specific region.
24 ©Vision IAS
• “Bottom-up” approaches: These mirror the SNA 2008 but are implemented at the city level, necessitating the use of city-level geographic markers during the data collection phase (for example, tagging census data or enterprise returns at the city level). These are rarely adopted due to the extremely high data requirements. For instance, based on the income approach to calculating GDP essentially adds up income generated through the production of goods and services.
The report has recommended top- down approach for calculating City Level GDP.
Significance of the city level GDP
Gross Domestic Product (GDP) and how it’s calculated:
• GDP: The GDP of a country provides a measure of the monetary value of all the final goods and services produced within the country in a specific year.
• There are 3 theoretical ways of calculating GDP, which include:
o Expenditure Approach: The total spending on all final goods and services (Consumption goods and services (C) + Gross Investments (I) + Government Purchases (G) + (Exports (X) - Imports (M)) GDP = C + I + G + (X-M). This method is the most commonly used representation of the GDP.
o Income Approach: This approach aims at adding up the incomes received by all the factors of production. Here, GDP=W (wages) + P (Profits) + R (Rents) + CP (Capital Gains)
o Value Added Approach: In this approach, the value/price of final goods and services (including financial goods and services) are added up and the value of the intermediate goods is subtracted.
• Indian GDP is measured by using gross value added (GVA) at market price i.e. all final finished goods and services produced domestically in volume terms multiplied by their market prices give the value of total output.
• Rapid growth of urban sector in India: Urban areas are considered as engine of economic growth for India
with the sector contributing more than 60% of India’s GDP in
2011 and are likely to contribute around 75% by 2020.
• Wise fiscal decisions by municipal bodies and investors: It would ensure better decisions on needed infrastructure & investment and leveraging their economic strength to raise funds to finance their needs.
• Provide vital indicators for Urban development: It would help in formulating the economic indicators needed to ensure improved quality of life, job creation and sustainability, which are also the three main components of Smart City mission.
• Would highlight Indian cities at global level: According to
Global Metro Monitor Report, 2018 by Brookings Institution,
About System of National Accounts 2008
(SNA 2008)
• The SNA 2008 is the latest version of the international statistical standard for the national accounts, adopted by the United Nations Statistical Commission (UNSC).
• The aim of SNA is to provide an integrated, complete system of accounts enabling international comparisons of all significant economic activity. However, adherence to it is entirely voluntary, and cannot be rigidly enforced.
several Indian cities rank in the 300 global cities with the fastest GDP growth rates, with GDP of Hyderabad growing at 8.7% followed by Surat at 7.9% which are comparable to the fastest growing Chinese cities.
Challenges in city level GDP calculations
• Complex exercise: Calculating city level GDP is more of data intensive exercise and much of the required data is not tracked at the city level, such as inter-city trade, whereas, data on country level GDP is readily available and is codified based on the System of National Accounts (latest version of 2008).
• Current data collection focus on state level estimates: In India, MoSPI calculates national GDP and sets the methodology for estimating GDP at the state level. Sampling and data collection is thus currently focused on state level estimates.
• Requires clear definition of city boundaries: As GDP is defined as the output generated in a specific area within a specific time, a clear definition of city boundaries is mandatory.
Why in news?
Recently, National Payment Corporation of India (NPCI) has upgraded the Unified Payment Interface (UPI) with enhanced features.
New features in UPI 2.0
• Linking of overdraft account – Apart from the savings and current accounts, the UPI users can now link their overdraft account to it and all the facilities and benefits of overdraft account would be made available to the users.
About NPCI
• It is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007
• It is the umbrella organization for all retail payments and settlement systems in the country.
• It also manages the UPI platform
• It links all the ATMs in India
23 ©Vision IAS
• One-time Mandate (account blocking) – It allows customers or merchants to pre-authorize a transaction and pay at a later date. It would also ensure that the customers do not miss the payments.
• Invoice in the inbox – It allows the users to check the invoice sent by merchant in their own inbox prior to making the payments, thus allowing the customers to check the credentials beforehand.
• Security Layer in QR – The app allows the users to scan the QR code and check the authenticity of the merchants through notification to the user to ascertain the information.
• Increased Transaction Limit – The pre-existing transaction limit (1 lakh daily) has been raised to 2 lakh daily.
Challenges
• Even though the transaction limit has been raised to 2 lakh but certain banks still have limits much lower than 1 lakh while individual app such as BHIM, Whatsapp etc. have even lower limits.
• There is also lack of initiatives from banks for penetration of QR Codes for UPI whereas wallets have aggressively placed their stickers.
• The invoice in the inbox may have a deeper security risk as it may be accessible to anyone with the link which could lead to increased and unnecessary data harvesting.
• The overdraft feature of the UPI 2.0 may also lead to over-spending leading to banks charging the account holders.
• UPI 2.0 also doesn’t have a grievance redressal mechanism that would ensure refund of failed transactions in a reasonable time period.
• The ‘standing instruction’ feature that would allow recurring payments from the user’s bank account towards loan payment or bill payment after a specific interval, enabled by a one- time digital mandate need to be included to tap Rs 9 lakh crore worth of bill payments market which is still dominated by cash
3.6. PR OPOSAL FOR CI TY -LE V E L GDP
Why in News?
Recently, Ministry of Housing and Urban Affairs (MoHUA) commissioned The Economist Intelligence Unit (EIU) to evaluate methodologies for calculating city-level gross domestic product (GDP), and to assess their applicability to India.
Various Approaches used in calculating City level GDP
• “Top-down” approaches: These are essentially used in city-to-state/region or city-to-country ratios to estimate city-level GDP, using existing national or state-level GDPs. Some of these estimates are for specific regions or metropolitan areas, although the concept remains valid for the smaller city unit. For instance, it uses population data to estimate output generated in a specific region.
24 ©Vision IAS
• “Bottom-up” approaches: These mirror the SNA 2008 but are implemented at the city level, necessitating the use of city-level geographic markers during the data collection phase (for example, tagging census data or enterprise returns at the city level). These are rarely adopted due to the extremely high data requirements. For instance, based on the income approach to calculating GDP essentially adds up income generated through the production of goods and services.
The report has recommended top- down approach for calculating City Level GDP.
Significance of the city level GDP
Gross Domestic Product (GDP) and how it’s calculated:
• GDP: The GDP of a country provides a measure of the monetary value of all the final goods and services produced within the country in a specific year.
• There are 3 theoretical ways of calculating GDP, which include:
o Expenditure Approach: The total spending on all final goods and services (Consumption goods and services (C) + Gross Investments (I) + Government Purchases (G) + (Exports (X) - Imports (M)) GDP = C + I + G + (X-M). This method is the most commonly used representation of the GDP.
o Income Approach: This approach aims at adding up the incomes received by all the factors of production. Here, GDP=W (wages) + P (Profits) + R (Rents) + CP (Capital Gains)
o Value Added Approach: In this approach, the value/price of final goods and services (including financial goods and services) are added up and the value of the intermediate goods is subtracted.
• Indian GDP is measured by using gross value added (GVA) at market price i.e. all final finished goods and services produced domestically in volume terms multiplied by their market prices give the value of total output.
• Rapid growth of urban sector in India: Urban areas are considered as engine of economic growth for India
with the sector contributing more than 60% of India’s GDP in
2011 and are likely to contribute around 75% by 2020.
• Wise fiscal decisions by municipal bodies and investors: It would ensure better decisions on needed infrastructure & investment and leveraging their economic strength to raise funds to finance their needs.
• Provide vital indicators for Urban development: It would help in formulating the economic indicators needed to ensure improved quality of life, job creation and sustainability, which are also the three main components of Smart City mission.
• Would highlight Indian cities at global level: According to
Global Metro Monitor Report, 2018 by Brookings Institution,
About System of National Accounts 2008
(SNA 2008)
• The SNA 2008 is the latest version of the international statistical standard for the national accounts, adopted by the United Nations Statistical Commission (UNSC).
• The aim of SNA is to provide an integrated, complete system of accounts enabling international comparisons of all significant economic activity. However, adherence to it is entirely voluntary, and cannot be rigidly enforced.
several Indian cities rank in the 300 global cities with the fastest GDP growth rates, with GDP of Hyderabad growing at 8.7% followed by Surat at 7.9% which are comparable to the fastest growing Chinese cities.
Challenges in city level GDP calculations
• Complex exercise: Calculating city level GDP is more of data intensive exercise and much of the required data is not tracked at the city level, such as inter-city trade, whereas, data on country level GDP is readily available and is codified based on the System of National Accounts (latest version of 2008).
• Current data collection focus on state level estimates: In India, MoSPI calculates national GDP and sets the methodology for estimating GDP at the state level. Sampling and data collection is thus currently focused on state level estimates.
• Requires clear definition of city boundaries: As GDP is defined as the output generated in a specific area within a specific time, a clear definition of city boundaries is mandatory.
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