In its Union Budget of 2023-24, the government has decided to reduce the financial support extended to fintech startups and banks that provide UPI transactions. This move is likely to affect the services these entities offer in the near future.
The government allocated INR 2,137 Cr for financial institutions and fintechs in its previous budget, but the new budget has slashed this to INR 1,500 Cr, an approx. 30% decrease.
In the 2021-22 budget, the government allocated a meager INR 200 Cr as subsidy to UPI players. This is a far cry from the expected remuneration that they would have been hoping for. Despite opposition from industry stakeholders like the RBI, the Union Budget for 2022-23 exceptionally increased the outlay of the incentive scheme by at least 10 times. This move by the government may have a significant impact on UPI’s growth in the future.
Also read: Budget 2023: Understanding The Fine Print For A Better Financial Future
The Payment Council of India asked for a total of INR 8,000 crore to support MDR activities; with INR 6,000 crore being dedicated to UPI operations and the rest going towards RuPay debit cards.
