Summary:

As of March 2024, cash accounted for 60% of consumer spending, although this figure is fast dropping due to the transition towards digital payments after COVID. According to an RBI analyst, digital payment share grew from 14-19% in March 2021 to 40-48% in March 2024. Mr. Pradip Bhuyan highlighted that the Cash consumption Indicator (CUI) shows a decrease in cash consumption from 81-86% in Q1 2021 to 52-60% in Q1 2024, which aids in currency management.

According to the research, the United Payments Interface (UPI), which was created amid the 2016 demonetisation of high-value currencies, had tremendous growth during the Covid-19 shutdown in 2020. The average UPI transaction size fell from US$ 46.06 (Rs. 3,872) in FY17 to US$ 18.14 (Rs. 1,525) in FY24, indicating its growing appeal for low-value purchases. While cash is still preferred for low-value transactions, UPI's proportion of person-to-merchant transactions increased from 33% in 2020-21 to 69% in FY24.

Source: IBEF 

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