What’s in Today’s Article?

• BHIM-UPI Incentive Scheme Latest News
• Bharat Interface for Money (BHIM)
• UPI Incentive of ₹1,500 Crore to Banks
• BHIM-UPI Incentive Scheme FAQs

BHIM-UPI Incentive Scheme Latest News

• The Union Cabinet chaired by the PM Modi approved the ‘Incentive Scheme for promotion of low-value BHIM-UPI transactions Person to Merchant (P2M)’ for the financial year 2024-25.

Bharat Interface for Money (BHIM)

• BHIM is a digital payment platform that enables fast, secure, and reliable transactions using the Unified Payments Interface (UPI) via a mobile app and *USSD (99#) service.

Launch and Adoption

• Launched by the Prime Minister on 30th December 2016.
• Achieved 1 crore downloads on Android Play Store and over 2 million transactions within 10 days.

Key Features

• Interoperability: Works seamlessly with other UPI applications and bank accounts.
• Developed by NPCI: Created under RBI's guidance to enhance retail digital payments.
• User-Friendly Design: Offers quick onboarding, an intuitive interface, and seamless transactions.

Benefits for Merchants

• Enables direct bank account payments.
• Provides a Virtual Payment Address (VPA) and a QR code for easy transactions.

UPI Incentive of ₹1,500 Crore to Banks

• The Union cabinet has announced an incentive scheme for UPI payments of less than ₹2,000 for 2024–25 with an outlay of around ₹1,500 crore.

Background

• The Government promotes digital payments as part of its financial inclusion strategy while ensuring diverse payment options. 
• The cost of digital transactions is covered through the Merchant Discount Rate (MDR), which is up to 0.90% for debit cards and up to 0.30% for UPI P2M transactions. 
  • MDR is the fee banks charge merchants for processing transactions.
• Since January 2020, MDR has been waived for RuPay Debit Cards and BHIM-UPI transactions via legal amendments. 
• To support payment service providers, the Cabinet approved this incentive Scheme.

Aim of the Scheme

• The government aims to promote digital payments and increase BHIM-UPI transaction volumes to 200 billion in FY25.
• The incentive focuses on low-value peer-to-merchant (P2M) transactions to encourage small merchants.

Objectives of the Scheme

• Promote the indigenous BHIM-UPI platform.
• Achieve a transaction volume target of ₹20,000 crore in FY25.
• Strengthen digital payments infrastructure.
• Expand UPI penetration in rural and remote areas through solutions like UPI 123PAY (feature phone-based) and UPI Lite/UPI LiteX (offline payments).
• Maintain high system uptime and reduce technical failures.

Incentive Structure

• For transactions up to ₹2,000: 
  • Small merchants: 0.15% incentive.
  • Large merchants: No incentive.
• For transactions above ₹2,000: No incentives for any merchant.

Benefits of the Scheme

• Enhances digital transactions' convenience, security, and efficiency.
• Ensures zero additional charges for consumers and small merchants.
• Encourages UPI adoption among small merchants, aiding financial inclusion.
• Supports the government’s push for a less-cash economy.
• Ensures 24/7 availability of UPI services by incentivizing banks to maintain uptime and minimize technical failures.
• Balances UPI growth with minimal financial burden on the government.

Industry Concerns Over Insufficient Allocation

• The digital payment industry believes ₹1,500 crore is inadequate for sustaining UPI processing costs.
• Industry estimates suggest ₹4,000-₹5,000 crore is needed to support the ecosystem.
• Experts suggest introducing a controlled MDR (Merchant Discount Rate) of 0.25% for merchants with over ₹40 lakh turnover while keeping incentives for smaller merchants.

BHIM-UPI Incentive Scheme FAQs

Q1. What is the new BHIM-UPI incentive scheme?

Ans. The Indian government allocated ₹1,500 crore for incentivizing low-value BHIM-UPI transactions in FY25.

Q2. Who benefits from the BHIM-UPI incentive scheme?

Ans. Small merchants accepting transactions below ₹2,000 will receive incentives to promote digital payments.

Q3. Why was MDR waived for RuPay and BHIM-UPI?

Ans. To encourage digital payments, the government waived MDR on RuPay debit cards and BHIM-UPI transactions since 2020.

Q4. What is the government’s target for UPI transactions?

Ans. The goal is to reach 200 billion transactions and ₹20,000 crore transaction volume in FY25.

Q5. How does this scheme impact financial inclusion?

Ans. It expands UPI penetration in rural areas, strengthens the digital payments ecosystem, and enhances merchant adoption.

Source: TH | PIB | BS

What’s in Today’s Article?

• Trump’s Strategy on Houthis Latest News
• Latest Trigger for U.S. Attacks on Houthis
• Trump’s Objectives in Targeting the Houthis
• Houthi Resilience and Strategic Positioning
• Trump’s Strategy on Houthis FAQs

Trump’s Strategy on Houthis Latest News

• The U.S. launched over 40 precision strikes on Houthi-controlled areas in Yemen, including Sanaa, Sadaa, and Hodeidah Port, targeting Iran-backed militants.
• Former President Donald Trump warned the Houthis and Iran, stating that Houthi attacks must stop and that Iran would face consequences for its support. He emphasized that any attack by the Houthis would be considered an attack from Iran.
• In response, the Houthis escalated rhetoric and claimed multiple missile strikes on U.S. warships in the Red Sea.

Latest Trigger for U.S. Attacks on Houthis

• The Houthis' actions are linked to the Gaza conflict, which escalated after Israel resumed military operations in Jabalia recently, violating a ceasefire.

Red Sea Shipping Disruptions

• Since December 2023, Houthi attacks on Red Sea shipping lanes have forced vessels to reroute via the Cape of Good Hope, significantly increasing insurance costs and disrupting global trade.

U.S. Policy and Naval Operations

• Biden's Approach (2024): Listed Houthis as Specially Designated Global Terrorists but did not reclassify them as an FTO (Foreign Terrorist Organization).
• Operation Prosperity Guardian (2023): U.S. Navy-led mission to protect shipping lanes and ensure freedom of navigation.
• Trump’s Actions (2021 & 2025): First designated Houthis as an FTO in 2021, then re-designated them in 2025.

Trump’s Renewed Focus on Houthis

• Trump's recent Truth Social post emphasized that any Houthi attack is considered an attack by Iran, reinforcing the U.S. commitment to countering threats to global shipping and maritime security.

Trump’s Objectives in Targeting the Houthis

• Shift in U.S. Military Focus
  • Since 2015, the U.S. has supported the Saudi-led Operation Restoring Hope against the Houthis.
  • During Trump’s first term (2017–2020), U.S. military actions in Yemen primarily targeted Al Qaeda and ISIS, not the Houthis.
  • Houthi attacks in the Red Sea over the past 15 months have drawn the U.S. into direct military action against them.
• Strategic Balancing: Targeting Houthis, Avoiding Iran War
  • Trump’s military strikes on Houthis serve as a warning to Iran while avoiding direct confrontation.
  • His social media posts reinforce pressure on Tehran, signaling potential nuclear negotiation leverage.
• Official U.S. Justification and Arab States’ Stance
  • The White House statements focus solely on protecting Red Sea shipping from Houthi attacks.
  • Arab states, including Saudi Arabia, have distanced themselves from U.S. military actions, with Riyadh advising restraint since January 2024 and denying logistical support for U.S. strikes.

Houthi Resilience and Strategic Positioning

• The Houthis have endured over 20,000 airstrikes from the Saudi-led coalition (2015–2023).
• They use mobility and modular combat units, similar to Hezbollah’s asymmetric warfare strategies.

Shift to Missile and Drone Warfare

• Before 2015, the Houthis did not use missiles but had already survived six wars (2004–2010) against Yemen’s government.
• Since 2015, they have focused on drones, rockets, and missiles, mirroring Hezbollah’s 2006 strategy against Israel.
• Despite continued U.S. and coalition airstrikes, the Houthis maintain operational capabilities, evident in ongoing attacks on Red Sea shipping.

Iran’s Role: Influence vs. Independence

• Iran is the Houthis’ main but not sole backer.
• Trump claims Iran controls the Houthis, but Tehran officially maintains that Ansar Allah operates independently.

Broader International Support: Russia & China

• China indirectly funds the Houthis by buying 90% of Iran’s oil exports (2024).
• Russia provides intelligence and is reportedly expanding small arms and missile sales to the Houthis.
• Many Houthi anti-ship missiles are based on old Chinese C-802 designs.

U.S. Strikes: Limited Effect on Houthi Capabilities

• American analysts agree that sporadic U.S. strikes will dent but not eliminate the Houthis’ military power.
• Diplomatic and military support from Iran, Russia, and China ensures the Houthis’ continued resilience in the conflict.

Trump’s Strategy on Houthis FAQs

Q1. Why did the U.S. strike Houthis in Yemen?

Ans. The U.S. launched airstrikes to stop Houthi attacks on Red Sea shipping lanes and global trade routes.

Q2. What is Trump’s stance on Iran in this conflict?

Ans. Trump warns Iran, stating any Houthi attack will be treated as an attack by Iran, signaling potential retaliation.

Q3. How do the Houthis remain resilient?

Ans. They adopt mobile warfare tactics, rely on drones and missiles, and receive support from Iran, China, and Russia.

Q4. What role does China and Russia play in this conflict?

Ans. China indirectly funds Houthis via Iranian oil, while Russia provides intelligence and possibly arms.

Q5. Will U.S. airstrikes eliminate the Houthi threat?

Ans. Analysts believe sporadic strikes may weaken but won’t eliminate Houthis due to their continued external support.

Source: IE | BBC

What’s in Today’s Article?

• Freebies Latest News
• Background
• Understanding Freebies and Subsidies
• Key Issues Highlighted by Rajya Sabha Chairman
• Proposed Solutions for Managing Freebies
• Conclusion
• Freebies Debate FAQs

Freebies Latest News

• Criticising the culture of “freebies”, Vice-President and Rajya Sabha Chairman Jagdeep Dhankhar on March 19, 2025 said the issue should be debated in Parliament.

Background

• Rajya Sabha Chairman Jagdeep Dhankhar has raised concerns over the growing culture of freebies, urging Parliament to hold a serious debate on the issue. 
• He emphasized the need for a national policy to ensure that government investments are structured and used for the larger public good.
• His remarks came after Samajwadi Party MP Ram Gopal Yadav demanded an increase in Members of Parliament Local Area Development Scheme (MPLAD) funds from ₹5 crore to ₹20 crore per annum, citing rising construction costs.

Understanding Freebies and Subsidies

• Freebies refer to government-funded benefits such as:
  • Free electricity, water, or transport.
  • Direct cash transfers without productivity conditions.
  • Loan waivers for specific sectors.
  • Free smartphones, laptops, or other consumer goods.
• While subsidies are aimed at specific economic needs, such as:
  • Agricultural subsidies for fertilizers, seeds, and procurement prices.
  • Food security subsidies through schemes like the Public Distribution System (PDS).
  • Education and healthcare subsidies for the underprivileged.
• Jagdeep Dhankhar stressed that subsidies, where necessary, should be directly transferred to beneficiaries, following the model of developed countries like the U.S., where farm subsidies are transparent and efficiently distributed.

Key Issues Highlighted by Rajya Sabha Chairman

• Fiscal Sustainability of Freebies
  • Freebies impose significant financial burdens on state and central governments.
  • They often lead to higher fiscal deficits, forcing governments to cut funds from essential sectors like infrastructure, education, and healthcare.
  • Without a structured investment approach, resources may be misallocated, affecting long-term economic growth.
• Electoral Impact and Populist Allurements
  • Freebies are often used as election strategies to attract voters.
  • Dhankhar pointed out that governments, once elected, often struggle with the financial burden of fulfilling these promises.
  • This raises concerns over policy continuity and governance efficiency.
• The MPLAD Fund Controversy
  • Samajwadi Party MP Ram Gopal Yadav argued that current MPLAD funds (₹5 crore per annum) are insufficient due to rising costs.
  • He proposed an increase to ₹20 crore per annum, along with GST exemptions and a technical quality-control cell.
  • Dhankhar linked this discussion to the broader debate on efficient government spending, calling for a review of all public investment mechanisms.
• Disparity in Political Salaries and Perks
  • Dhankhar also spoke about disparities in salaries, pensions, and perks between MLAs and MPs, which vary significantly across states.
  • Some state legislators receive higher benefits than Members of Parliament, creating an imbalance in political remuneration policies.
  • A standardized system of political compensation could improve transparency and fairness.

Proposed Solutions for Managing Freebies

• National Policy on Government Expenditure
  • A clear framework should define which welfare schemes qualify as essential subsidies and which are politically motivated freebies.
  • Parliamentary oversight could ensure that economic policies balance social welfare and fiscal responsibility.
• Direct Benefit Transfers (DBT) for Welfare Schemes
  • Eliminating intermediaries and using DBT for subsidies can reduce leakages and corruption. Examples: 
    • Jan Dhan-Aadhaar-Mobile (JAM) Trinity has already streamlined benefit transfers.
    • Expanding DBT to all major welfare schemes could improve efficiency and accountability.
• Performance-Based Welfare Programs
  • Linking benefits to employment generation, skill development, or community service can make schemes self-sustaining. Example: 
    • Instead of free electricity, incentivizing renewable energy adoption through solar power subsidies.
• Regulating Election Promises
  • The Election Commission of India (ECI) should consider guidelines that: 
    • Mandate parties to disclose the financial impact of freebies before elections.
    • Ensure manifesto promises are backed by revenue generation plans.
• A Rationalized MPLAD Fund System
  • While increasing MPLAD funds can improve local development, it must be: 
    • Monitored for transparency and efficiency.
    • Linked to long-term projects rather than short-term political benefits.

Conclusion

• The debate on freebies is essential to ensuring responsible governance and fiscal discipline in India. 
• While welfare schemes play a critical role in reducing poverty, they should be financially sustainable and efficiently targeted.
• With Vice-President Jagdeep Dhankhar’s call for a structured policy, the discussion on government spending, political accountability, and electoral reforms is likely to gain momentum. 
• A national consensus on balancing welfare and fiscal responsibility is the need of the hour.

Freebies Debate FAQs

Q1. What are freebies in the context of government schemes?

Ans. Freebies are non-conditional benefits like free electricity, transport, or direct cash handouts.

Q2. Why did Rajya Sabha Chairman Jagdeep Dhankhar call for a debate on freebies?

Ans. He raised concerns over fiscal sustainability, electoral influence, and the need for structured government spending.

Q3. What is the difference between subsidies and freebies?

Ans. Subsidies are targeted financial aid (e.g., agriculture, education), while freebies are populist incentives without long-term economic planning.

Q4. How do freebies impact the economy?

Ans. Excessive freebies increase fiscal deficits, reduce investment in essential infrastructure, and create unsustainable financial burdens.

Q5. What reforms can help manage freebies effectively?

Ans. Reforms like Direct Benefit Transfers (DBT), performance-linked schemes, and stricter election funding regulations can ensure better governance.

Source: TH | IE