31 December 2024 : The Hindu Editorial Analysis
1. UPI duopoly’s rise and market vulnerabilities
(Source – The Hindu, International Edition – Page No. – 9)
| Topic: GS3 – Indian Economy |
| Context |
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Rise of Unified Payments Interface (UPI) in India
- Since its launch, UPI has seen a meteoric rise, now accounting for nearly 80% of digital transactions in India.
- In August 2024 alone, the UPI ecosystem processed transactions worth over ₹20.60 lakh crore.
- This growth is remarkable in a country historically reliant on cash and with low digital literacy, reflecting UPI’s role in building trust in digital payments.
Challenges to UPI’s Continued Success
- UPI’s penetration currently stands at 30% of the population, showcasing significant progress but leaving much of India untapped.
- Bringing the remaining 70% into the digital payment ecosystem will require innovations in app design, service offerings, and the overall product base.
Market Concentration and Risks
- Two Third Party App Providers (TPAPs), PhonePe and Google Pay, control over 85% of the UPI market.
- Paytm, the third-largest player, holds only a 7.2% market share, creating a highly concentrated market.
Risks of Market Concentration
- Systemic Vulnerability
- The dominance of PhonePe and Google Pay creates single points of failure.
- A sudden stoppage or disruption in their services could ripple through India’s financial ecosystem.
- Decreased Competition and Innovation
- The large scale and user base of these dominant TPAPs create barriers for smaller players.
- The zero-charge framework compels service providers to focus on scale for monetization, discouraging innovation.
- Foreign Ownership Concerns
- Both dominant TPAPs are foreign-owned, with PhonePe under Walmart and Google Pay under Google.
- This raises concerns about data security and foreign dominance in a critical financial ecosystem.
- Encouraging Indian TPAPs can provide a counterbalance and reduce risks.
Path to a Robust and Inclusive UPI Ecosystem
- Developing a level playing field for Indian developers and smaller players is crucial for UPI’s next phase of growth.
- Implementing market share caps and providing appropriate incentives can foster competition, innovation, and resilience.
- Ensuring fairness and addressing risks will safeguard public trust and enable UPI to achieve its transformational potential.
Conclusion
- UPI’s success depends on maintaining public trust through innovation, reliability, and resilience.
- Market concentration, especially by foreign-owned players, poses risks to competition and security.
- A balanced ecosystem with opportunities for Indian players is crucial for sustained growth.
- Regulatory measures, including market share caps, are needed to prevent monopolistic dominance.
| Practice Question: Analyze the challenges posed by market concentration in India’s UPI ecosystem, focusing on its impact on innovation. Suggest measures to address issues and ensure sustainable growth of digital payments in India. (250 Words /15 marks) |
2. States and the danger of poorly manufactured drugs
(Source – The Hindu, International Edition – Page No. – 8)
| Topic: GS2 – Social Justice – Health |
| Context |
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Incidents of Not of Standard Quality (NSQ) Drugs in India
- The Drugs and Cosmetics Act, 1940, allows pharmaceutical companies to sell their drugs across the country, even if they are licensed and inspected only in the state where the manufacturing facility is located.
- This regulatory gap makes it difficult for states like Karnataka to prevent poorly manufactured drugs from flooding local pharmacies, leading to significant public health risks.
Problems Faced by States in Addressing NSQ Drugs
- Some states face challenges in dealing with drugs manufactured outside their jurisdiction.
- Drug inspectors can only prosecute pharmaceutical companies, which is a time-consuming process.
- During the trial, manufacturers from other states can continue selling their products, as only the home-state drug inspectors have the authority to cancel or suspend manufacturing licenses.
Proposed Solutions to Address the Issue
- One cost-effective solution is to promote information sharing between the drug control departments of different states and public procurement agencies.
- A centralized database of test results from central and state drug testing laboratories would allow drug inspectors and procurement officials to track drug failures across states. This would help in adopting a risk-based approach for enforcement and procurement decisions.
- Centralized inspection reports and licensing information from state drug inspectors should also be made available in one database.
- This would allow procurement agencies to verify pharmaceutical companies’ credentials and avoid the purchase of low-quality drugs.
Benefits of a Centralized Database
- A centralized database would assist procurement agencies the state agencies in verifying the quality of pharmaceutical manufacturers before purchasing drugs.
- This would help prevent incidents like the recent scandal in Maharashtra, where spurious antibiotics were sold to public hospitals.
- By tracking manufacturers with poor inspection records, procurement officers can prioritize suppliers from states known for rigorous inspections, ultimately improving public health outcomes.
Additional Recommendations
- A central register should be created by the Union Ministry of Health to record pharmaceutical manufacturers blacklisted by procurement agencies for supplying NSQ drugs. This would help eliminate bad players from the market.
- States should be empowered with legal authority to block manufacturers from other states from selling drugs within their jurisdiction if the drugs have caused adverse health effects, such as deaths, until the manufacturers rectify the issue.
Conclusion:
- The issue of NSQ drugs in India highlights significant regulatory gaps and public health risks.
- Strengthening information sharing through centralized databases can improve drug quality control.
- Empowering states with legal authority and advocating for legislative reforms will ensure better monitoring and enforcement, improving drug safety across the nation.
| Practice Question: Discuss the challenges posed by the current drug regulatory framework in India, particularly in addressing the issue of Not of Standard Quality (NSQ) drugs. How can information sharing and legal reforms improve drug safety and public health? (250 Words /15 marks) |
For more such UPSC related Current Affairs, Check Out: 30 December 2024 : Indian Express Editorial Analysis
