UPI versus cash
The recent growth in cash in circulation is driven by the growing demand in States. However, the cash in circulation has gone through a transformation, as demand for the highest denomination note of ₹500 is driving all of the growth. This is in stark contrast to the UPI transactions, where small token customer-to-merchant transactions dominate. Given the nature of India’s economy, the small token transactions form bulk of the economic activity, and are becoming a more and more significant component of GDP compared to cash. A recent report by ‘SBI research’ stated that governments should take care not to disincentivise UPI transactions.
The recent growth in cash in circulation is driven by the growing demand in States. However, the cash in circulation has gone through a transformation, as demand for the highest denomination note of ₹500 is driving all of the growth. This is in stark contrast to the UPI transactions, where small token customer-to-merchant transactions dominate. Given the nature of India’s economy, the small token transactions form bulk of the economic activity, and are becoming a more and more significant component of GDP compared to cash. A recent report by ‘SBI research’ stated that governments should take care not to disincentivise UPI transactions.
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