e-RUPI's ambitious promise and cloud over Adani Wilmar's IPO - The Morning Context

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  • I was amused to see the headlines after the launch of e-RUPI, which Prime Minister Narendra Modi promised will provide “leakage-free” benefits. I beg to differ. e-RUPI may be a good idea. But leakage free? I don’t think so.

  • The new e-governance platform will essentially deliver vouchers on mobile phones for people to avail government services and essential goods at a discounted rate. These vouchers will be person-specific and can be used by private entities as well

  • The first question that should have been asked is: What is wrong with the current Aadhaar-based DBT system, or AEPS? And the second: Why does e-RUPI have on the Unified Payments Interface, or UPI?

  • According to Right to Information documents sourced by technology and privacy activist Srinivas Kodali, in 2018-19 the government transferred benefits worth a total of Rs 867.6 crore through the Aadhar-enabled Payments System, of which nearly Rs 70 crore failed due to technical and business-related issues.

  • Under the PM-Kisan scheme, the government admitted before Parliament in February this year that over Rs 2,326 crore was wrongly transferred. Less than one-tenth of this was recovered by the government from the bank accounts that received this money.

  • For now, the government has rolled out the e-RUPI to enable people to pay for vaccines. A little late, but it’s a nice idea. But if one were to understand how the vaccines are being delivered, it makes little sense.

  • If urban India has received their first doses of the vaccines, and rural India is going to be enrolled onto CoWIN by public authorities like the Common Service Centre network and thereafter vaccinated at public centres, why do they need a voucher?

  • Essentially, e-RUPI relies on merchants and vaccine centres to have the latest point-of-sale machines. These machines need to be able to scan the QR-code voucher or the merchant needs to be able to input the voucher numbers, sent via SMS, to effect a discounted sale.

  • Let’s say a ration shop does not accept the QR-code or SMS voucher. They can force the beneficiary to pay the full price for a bag of rice. And if the beneficiary does not have a debit card or UPI, they will be forced to pay in cash. So there are ways to circumvent the e-RUPI model at the ground level, leading to corruption and leakage.

  • All said and done, e-RUPI is a nice idea. But do not for a moment think that this is to benefit the poor and weakest sections of the country in its immediacy.1

  • Secondly, the failures of the DBT mission to move past the Aadhaar identification model is forcing the government to rethink its strategy.

  • Firstly, technology platforms to solve governance issues benefit the rich and privileged first and foremost. CoWIN is the best example of the inequality of tech solutionism.

  • And third, there is an ulterior motive to the e-RUPI. Just as demonetization was sold as a policy to hunt down the corrupt, e-RUPI is being peddled as an answer for better welfare delivery and to prevent leakages.

  • I am talking about Adani Wilmar Ltd, which has been a household name for decades through its essential kitchen commodities brand Fortune.

  • Fortune, as on date, accounts for approximately 66% of what Indians spend on essential kitchen commodities, making it one of the largest fast moving consumer goods (FMCG) and commodities companies in India.

  • Adani Wilmar, which after listing will become the seventh from the Adani group to do so, will use the IPO proceeds for three purposes – capital expenditure (Rs 1,900 crore), retiring the existing debt (up to Rs 1,170 crore) and for acquisitions and investments (Rs 500 crore).

  • It’s a solid business with solid prospects by any standards, exactly how Gautam Adani’s business ventures –be it airports, infrastructure or ports — appear at first look.

  • Doing business in India is not for the faint of heart. You’ve probably heard this so many times that I might sound like a broken record, but looking at the number of acts Adani Wilmar has to comply with, the number of small and big civil litigations the company is facing, I can’t help but be sympathetic.

  • From the necessary Food Standards and Safety Act to Legal Metrology Act (it enforces standards for weights and measures) and something called Boilers Act 1923 (which lays down processes for steam boilers and their examination), Adani Wilmar has listed out 30 acts that it needs to comply with to conduct business in India.

  • Naturally, with so many acts, the number of compliances is equally high, which has made Adani Wilmar susceptible to a bunch of civil and criminal suits.

  • Adani Wilmar’s promoters are facing cases from Serious Fraud and Investigation Office (SFIO), Securities and Exchange Board of Inda (SEBI), Directorate of Revenue Intelligence (DRI) and the Central Bureau of Investigation (CBI).

  • SFIO had filed a criminal complaint against Adani Enterprises and Adani Properties Private Limited before the magistrate court on 26 April 2012 alleging manipulation of share prices.

  • “In terms of the FIR, CBI has alleged that AEL has illegally participated in the tender process initiated by Andhra Pradesh Power Generation Corporation Limited and the National Co-operative Consumer Federation by engaging in cheating and criminal conspiracy. The investigation is ongoing,” said Adani Wilmar in the DRHP.

  • The company itself is facing a duty evasion case of Rs 38 crore (including interest) since 2007. The case pertains to duty evasion by labelling palm oil imports as hydrogenated oil.

Footnotes

  1. Immediacy; that’s the key word here. ↩

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