Digital payments rose last year more than the past five years, Niti Aayog says

KEY Highlights: 

• Digital payments rose 55% last financial year. 
• CAGR of digital payments in five years up to 2016 stood at 28%. 
• More than 82% currency already remonetised 

Digital payments in India rose 55% growth in the financial year 2016-17 (FY17) compared to CAGR (compounded annual growth rate) of 28% during the five year period ending 2015 – 16, Niti Aayog's analysis show. 

In value terms, growth of digital payment stood at  24.2% in FY17. 

Ratan P Watal, Principal Advisor, NITI Aayog, while unveiling the ‘Measurement of Digital Payments – Trends, Issues and Challenges’, mentioned that the retail payments segment accounted for as much as nearly 99% of total volumes. 

In contrast, the analysis added that outstanding stock of currency-in-circulation – which hovered around 12% of GDP during FY12 – FY16 period, has declined to 8.8% in FY17 – reflecting the  impact of demonetisation partially offset by the ongoing re-monetisation process. 

RBI on June 7, 2017 said that demonetisation's impact on currency circulation has been minimised with 82.6% of cash now 'remonetised'.

Data captured by Niti Aayog includes just a few select payment system indicators only and includes card transactions of only 4 major banks and PPI transaction of only 8 major non-bank entities for goods and services only. 

Watal said, “This dispels the doubts raised by some commentators regarding the growth of Digital Payments, subsequent to demonetization.”

Sudhakar Ramasubramanian, Co-Chairman, FICCI Committee on Fintech & MD and CEO, Aditya Birla Idea Payments Bank Ltd, said that though people had bank accounts, they still engaged in cash transactions but demonetisation accelerated the pace of digital payments. The government, industry and stakeholders for the first time had come together for the same cause.

As per Watal, initiative of the Government is that technology will ultimately drive consumer behavior in switching from “cash to card.” And now the new GST code will add to this momentum too.