Prime Minister Narendra Modi recently addressed an event to introduce first digital currency in the country. He launched an electronic voucher based digital payment system ‘e-RUPI’.

It is a person-specific and purpose-specific system that is easy, safe and secure. It will capture the unbanked and underprivileged population of India.


  • E-RUPI is a medium of digital payments in the cashless and contactless mode, which can be sent to recipients on their mobile in SMS string or a QR code.
  • It is like a prepaid gift voucher that can be redeemed at specific accepting centers which does not require any credit or debit card, a mobile app, or internet banking.
  • The beneficiaries and service providers will be connected to the sponsors of the services digitally without any physical interface. The system makes certain to pay the service provider only after the transaction is successfully done. The pre-paid feature ensures that payment is done timely to the service provider without any mediator.
  • The concept is different from virtual currency as it is a voucher-based payment system that is financed by the existing Indian rupee as the original asset.


  • The NPCI, along with the Department of Financial Services, Ministry of Health & Family Welfare, and National Health Authority, has developed a system on its UPI platform and engaged banks to issue entities.
  • The corporate or government agencies will have to approach partner banks and mention the person’s details (receiver) and the purpose of the payment.
  • The service provider will recognize the beneficiaries based on their mobile number and voucher allocated by the bank and deliver the payment only to the person whose name was specified.


  • Government Sector: The system will help the government agencies deliver various welfare services directly to the public without corruption. It will be easier to make schemes like fertilizer subsidies, drugs, and nutritional support accessible to people.
  • Private Sector: They can use digital vouchers for employee welfare and Corporate Social Responsibility programs.



It will best serve the idea of the government to build digital payment infrastructure as it will highlight the loopholes and provide room for improvement. Consequently, it will pave the way for the government’s future projects like Central Bank Digital Currency.


Government of several countries like US, Colombia, Chile, Sweden, Hong Kong etc., have adopted this kind of payment system to deliver essential subsidies in form of ‘School Voucher System’ to fund students’ education.


  • Reserve Bank of India suggests the following reasons for the growth of digital currency in India:
  • People’s interest has inclined towards digital currency as an alternative to cash usage, especially for small value transactions.
  • The ratio of High currency to Gross Domestic Product (GDP) signifies another benefit of Central Bank Digital Currency.
  • It will compete with private virtual currencies like Bitcoin and Ethereum, which already exist in the market.
  • It will also ensure support to the general public in an environment of volatile private virtual currencies.

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