The Monthly Economic Review for October released by the Finance Ministry on November 21 stated that the digital transactions thorugh the Unified Payments Interface (UPI) crossed an unprecedented 11 billion transactions. This surge, marking an all-time high, underscores the nation's accelerating shift toward digital payments and strong consumption, the report said.
"The UPI transactions continue to break records and have crossed 11 billion transactions in October 2023 on the back of the solid festive demand," the report said.
Digital Payments Fueled By Consumption Wave
The report highlighted private final consumption expenditure (PFCE) as a pivotal driver of India's economic growth in FY24. The festive season strengthened consumption demand further, buoyed by accumulated savings, decreased unemployment rates, and the wealth effect emanating from rising real estate prices and capitalisation of equity markets.
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Notably, the report cited “a decrease in the average ticket size for person-to-merchant UPI transactions from Rs 731 in October 2022 to Rs 658 in October 2023”, indicating a growing depth in digital payments.
UPI Transaction Insights From Report
From Rs 42 lakh crore in the April-October period of 2021-22, the UPI transaction value surged to an impressive Rs 107.28 lakh crore in 2023-24. However, the year-on-year (YoY) growth rate showcases a notable trend. While the growth stood at a whopping 117.2 per cent in 2021-22, it slumped to 78.5 per cent in 2022-23 and further to 43.7 per cent in 2023-24, showing the market saturation.
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In tandem with the value surge, the volume of UPI transactions also showed remarkable surge. The volume escalated from 2266 crore transactions in April-October 2021-22 to an astonishing 7016 crore transactions in the same period of 2023-24. Yet, similar to the value trend, the YoY growth rate also showed signs of saturation as it showed a consistent decline from 114 per cent in 2021-22 to 96 per cent in 2022-23 and further to 58 per cent in 2023-24.
Other Insights From Report For Investors
WithUS rate hike expections have reversed, and the lower US Treasury yields and decline in oil prices will benefit emerging markets, including India, the report said. However, overvalued US stocks pose global risks for stocks.
On the inflation front, the decline in international crude oil prices and continued moderation in core inflation are likely to control inflationary pressures going forward. Recognising this, RBI has also indicated that any further tightening of monetary policy will likely occur when transmission is closer to completion and if the situation warrants, the report said.
With Tier-II/III cities getting access to high-speed internet, driving brand expansions and distribution facilities in these areas, e-commerce categories such as Home Decor, Health and Pharma, Fashion and personal care products have room for growth, the report signalled.
