Question 91 from UPSC CSE 2017 - Current
Affairs

Question

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

IASCODEX · Accepted Answer

Correct Option: A. Mobile wallets will not be necessary for online payments.

Strategy: Focus on the core function introduced by UPI: enabling instant, seamless bank-to-bank transactions directly through mobile apps. This capability reduces the need for intermediary mobile wallets, which were earlier required to make such transfers. Other options are either overstated, not directly related, or speculative outcomes of technology introduction, whereas the first option matches the immediate and direct impact of UPI's design and adoption.

Key Info: Unified Payments Interface (UPI) is a real-time payment system developed by the National Payments Corporation of India (NPCI). It allows instant money transfers between bank accounts through mobile devices, integrating multiple bank accounts into a single application.

**Key Features**
- Enables direct bank-to-bank transactions, reducing reliance on intermediary mobile wallets like Paytm or MobiKwik.
- Supports peer-to-peer transfers and merchant payments.
- Uses two-factor authentication for enhanced security.

**Impact and Scope**
- Contributes to India's move toward a less-cash economy, financial inclusion, and fintech innovation.
- Can be used for direct benefit transfers (DBT), though efficiency depends on broader systemic factors.
- Does not imply the complete replacement of physical currency or guarantee substantial increases in foreign direct investment.

IASCODEX · Answer

Option B: Digital currency will totally replace the physical currency in about two decades.

IASCODEX · Answer

Option C: FDI inflows will drastically increase.

IASCODEX · Answer

Option D: Direct transfer of subsidies to poor people will become very effective.