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Ten Years After Demonetisation, India's Cash Dependence Persists Amid UPI Growth
Sentiment: NeutralHigh Priority
What Happened?
A decade after demonetisation, India's reliance on cash remains strong despite the rise of digital payments through UPI. Currency in circulation has more than doubled since the note ban in 2016.
Key points
- Currency in circulation increased from ₹17.77 trillion in November 2016 to ₹43.16 trillion by October 2026.
- The currency-GDP ratio returned to approximately 12% by FY26, similar to pre-demonetisation levels.
- UPI transactions surged from 17.8 million in FY17 to 241.62 billion in FY26, a 13,600-fold increase.
- Digital payments accounted for 84% of India's digital transactions in FY26.
- Despite digital growth, cash remains important for households and businesses.
Key insights
- The growth of cash alongside digital payments indicates a dual payment preference among consumers.
- Cash continues to serve as a reserve for emergencies, despite increased digital transactions.
- The findings suggest that income levels and precautionary motives drive cash demand.
Why it matters
Understanding the persistence of cash usage is crucial for assessing India's economic landscape.
Source
Business Standard
