APSC Answer Writing (Daily) based on Assam Tribune – 12/10/2026

For APSC CCE and other Assam Competitive examinations aspirants, practicing Daily Answer Writing is vital. This blog covers the most important Main question and its model Answer from the Assam Tribune today (12-10-2026).

Q. UPI has emerged as a critical component of India’s digital public infrastructure. Discuss the challenges of ensuring its financial sustainability while preserving affordability, financial inclusion and public trust. (15 Marks, 250 Words)

Accounting for nearly 46% of global real-time digital transactions, UPI is the backbone of India’s Digital Public Infrastructure, directly advancing SDG 8 (Decent Work and Economic Growth) and SDG 9 (Innovation).

1. The Need for Financial Sustainability (Why MDR is Required)

Infrastructure Costs: Banks and Payment Service Providers (PSPs) incur heavy costs for server maintenance, cybersecurity, and tech innovation.
Systemic Viability: A zero Merchant Discount Rate (MDR) model is unviable long-term, risking service degradation and over-dependence on government subsidies.
Recent Context: The IIT Bombay Report (UPI at a Crossroads) and recent NPCI circulars suggest introducing a rationalized MDR (e.g., 0.4% on specific high-value P2M transactions) to fund the ecosystem.

2. Multi-Dimensional Challenges (Stakeholder-Based Analysis)

Consumers (Public Trust & Affordability): Users accustomed to free transactions fear indirect cost pass-throughs by merchants. Any perceived penalty on digital payments risks a behavioral shift back to cash.
Small & Micro Merchants: Thin-margin businesses (Example: Local street vendors and self-help groups in Assam) cannot absorb transaction fees, directly threatening grassroots economic formalization.
Borrowers (Financial Inclusion): Levying MDR on loan EMIs and micro-finance debt collections increases friction for vulnerable borrowers, defeating the core purpose of financial inclusion.
Regulators (RBI/NPCI): Balancing the Payment and Settlement Systems Act, 2007 mandates—ensuring a profitable business model for PSPs without violating the mandate of accessible public goods.

3. Strategic Way Forward (Balancing Sustainability and Inclusion)

Approach Area	Proposed Intervention
Proportionate Pricing	Confine MDR strictly to large merchants (e.g., >₹50 crore turnover) and online e-commerce giants.
Targeted Exemptions	Keep Person-to-Person (P2P) transfers, small retail P2M, and loan EMIs strictly fee-free.
Regulatory Transparency	RBI and NPCI must enforce clear, transparent guidelines preventing hidden fee pass-throughs to retail consumers.
Alternative Funding	Explore data-monetization (with strict privacy safeguards) and cross-selling financial products as revenue streams for PSPs.

Transitioning to a tiered, evidence-based MDR framework will ensure UPI remains a sustainable Digital Public Good, seamlessly balancing the operational viability of service providers with the financial inclusion of the masses.

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