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India at 77: Moving Swiftly Towards Freedom from Cash
India at 77: Moving Swiftly Towards Freedom from Cash

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As India gears up to celebrate its 77th Independence Day on August 15, 2023, one of its shining achievements in recent times is undoubtedly the fact that the country has taken giant strides towards transitioning into a digital economy. The incredible progress especially in digital payments adoption speaks volumes of the efforts being put in by the banking regulator, the government, consumers on their part who are keen to embrace new modes of digital payments, and the retail community at large who have upgraded their checkout infrastructure with state-of-the-art interfaces to accept digital payments.

The incumbent government through its Digital India initiative has aimed to transform India into an empowered society that is “Faceless, Paperless, Cashless”. Eight years since the official launch of Digital India on July 1, 2015, the adoption of digital payments in India has skyrocketed with UPI alone commanding a whopping 996 crore transactions [1] in July 2023 amounting to INR 15.34 lakh crore.  In fact, UPI is projected to clock 30-35 per cent growth in transaction value by FY26, as per a Whitepaper by Redseer titled 'Future of Online Payments' published in collaboration with Plural by Pine Labs.

By 2025, as per a projection by the Ministry of Electronics and Information Technology (MeitY) via the India’s Trillion Dollar Digital Opportunity report, India could end up creating a digital economy of somewhere between $800 billion to $1 trillion (or value equivalent to 18 to 23 percent of the country’s nominal GDP).

The success can be attributed to the remarkable policy interventions in recent times to foster an environment where digital payments are widely accepted by retailers not just in metro cities but in the hinterlands as well. The setting up of the Payments Infrastructure Development Fund (PIDF) by the Reserve Bank of India (RBI) to incentivise the deployment of payment acceptance infrastructure such as PoS terminals and QR codes in Tier-3 to 6 cities and northeastern states is a good example of positive policies fueling the growth of digital payments in India.

With pathbreaking reforms like the Pradhan Mantri Jan-Dhan Yojana (PMJDY), a national financial inclusion mission to provide access to banks who don’t have them, the digital literacy initiative of Pradhan Mantri Gramin Digital Saksharta Abhiyaan (PMGDISHA) which empowers people in rural areas to be digitally literate, the digital payments ecosystem is only going to get stronger from here onwards.

The e-commerce boom in India coupled with the rising transition of traditionally offline-only SMEs to omnichannel retail will further accelerate digital payments growth.

Will we ever achieve a truly cashless economy? Only time will tell! With reports of decrease in cash-in-circulation [2] and the successful pilot of the Central Bank Digital Currency (CBDC) by the RBI in retail segment, the future looks promising. There is no denying the fact that India is all set to break away from the years of reliance on the tangible currency and move swiftly towards greater digital payments acceptance.


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