New Delhi: The Reserve Bank of India (RBI) in a report stated that cash remained king when it comes to consumer expenditure. With 60 per cent of transactions still being made by consumers in cash, rupee notes remain the mode of choice for transactions in India. However,l digital transactions are catching up with online payments doubling to 40-48 per cent in March 2024 from 14-19 per cent in 2021.
Why cash remains king
A cash usage indicator (CUI) devised by RBI’s Pradip Bhuyan showed that the share of cash in private final consumption expenditure fell to 52-60 per cent in the March quarter of 2024 from 81-86 per cent in the March quarter of 2021. While cash usage remains strong CUI indicates a downtrend in the preference for cash in transactions, said Bhuyan.
This is underlined by the jump in share of UPI transactions to 87 per cent from 51 per cent in 2021 in volume terms for person to merchant transactions. In value terms, UPI’s share rose to 69 per cent from 33 per cent during the period under consideration.
How UPI transactions surged
To be sure, UPI has also become a major substitute for cash when it comes to smaller value transactions, according to Bhuyan. Another key factor attesting to the substitution of cash with UPI is the moderation in the ratio of currency with the public to the GDP. UPI stands for unified payments interface.
UPI transactions picked up after the demonetisation exercise and once again after the COVID-19 pandemic. As of date, the cap on UPI payments stood at Rs 1 lakh per day and Rs 10,000 per transaction on UPI 123Pay. Digital transactions rose by 20 per cent post-demonetisation compared to pre-demonetisation, according to the National Informatics Centre. India had processed nearly Rs 81 lakh crore worth of transactions during April-July 2023, making India the world leader in terms of digital transactions, the TOI reported.
Cash transactions in March 2024 remained at 60 per cent of total consumer spending, according to an RBI study. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
