UPSC Prelims 2017 GS Paper I · Q43 of 100 Economy easy

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

  1. (a) Mobile wallets will not be necessary for online payments. ✓ UPSC's answer
  2. (b) Digital currency will totally replace the physical currency in about two decades.
  3. (c) FDI inflows will drastically increase.
  4. (d) Direct transfer of subsidies to poor people will become very effective.

Why the answer is (a)

• UPI (NPCI, 2016) lets users pay directly from their bank accounts through a virtual payment address, in real time, from any UPI app.

• Because money moves bank-to-bank without pre-loading, mobile wallets that hold stored value become unnecessary for online payments — option (a).

• Replacing physical currency entirely (b), boosting FDI (c) and transforming subsidy transfers (d, which rely on Aadhaar-linked DBT) are not direct consequences of UPI.

• Hence option (a).

Why the other options are wrong

(b) Digital currency will totally replace the physical currency in about two decades.
UPI does not eliminate physical currency.
(c) FDI inflows will drastically increase.
UPI has no direct link to FDI inflows.
(d) Direct transfer of subsidies to poor people will become very effective.
Subsidy transfers rely on DBT/Aadhaar, not UPI.

Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2017, held on 18 June 2017. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.

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