A recent analysis of digital transactions has exploded the myth being spread by the Government of India about its spectacular growth. A 45% growth in 2016-17 in retail transactions in no way could be characterized as a “big leap in retails transactions”, alleged to have been achieved by “chocking of India’s physical currency supply” in November last year through.
The expert analysis by James Wilson, a member of Kerala-based Mullaperiyar Special Cell, says that there was in fact a “bigger leap” during the UPA days: It was recorded 53% between 2011-12 and 2012-13 and 49% between 2012-13 and 2013-14.
However, the next two years, 2014-15 and 2015-16, in the first two years of the BJP-led NDA came to power, the growth was to the tune of 37% and 40% respectively. At 45% growth in the last financial year, if at all, it helped surpass the earlier two years’ growth rate, yet it was lower than the one between 2011 and 2014.
Basing on latest Reserve Bank of India (RBI) data, released on June 16, 2017, Wilson says, the digital transactions in value terms did not rise despite the fact that the “currency in circulation (CIC) reached a figure of Rs 15.287 lakh crore” falling short by 15% of the CIC of Rs 17.977 lakh crores available on circulation as on November 4, 2016, the week prior to the announcement of demonetization.”
Quoting data from the National Payments Corporation of India (NPCI), the umbrella organisation for all retail payment systems in India, claiming to allow all Indian citizens to have unrestricted access to e-payment services, Wilson says, no doubt, in number of transactions, the Unified Payment Interface (UPI) transactions appeared to make a giant leapfrog.
Thus, from just 1,03,060 transactions in October, 2016 they went up to 91,67,277 transactions in May 2017, recording a stupendous 89 times growth. Value-wise, too, UPI recorded a growth of Rs 0.49 billion to Rs 27.65 billion, more than 56 times growth during the same period.”
Similarly, Prime Minister Narendra Modi-supported BHIM (Bharat Interface for Money) mobile app, developed by NPCI, also based on the UPI interface, recorded growth in transactions from 17,17,696 transactions in January 2017 to 39,75,750 transactions in May 2017, a 2.3 times growth. Amount-wise, BHIM recorded a growth from Rs 3.56 billion to Rs 13.07 billion during the same period.
“The growth of UPI as well as BHIM (a subset of UPI) may create an impression that we made a giant leap in terms of digital transactions. But it is important to place this data next to ground realities”, insists Wilson.
“As per RBI data, during April, 2017, total cash of Rs 2,171 billion was withdrawn from ATMs alone (no data of bank withdrawals is considered here), while the UPI transaction figure was just Rs 22.41 billion during the same period. That is, UPI-based transactions replaced cash by around 1%”, he underlines.
Wilson adds, “The NPCI website claims that as of May 31, 2017 BHIM crossed 14.54 million downloads. We have more than 300 million smartphones in India, which means that BHIM penetration is still below 5% of total smartphone penetration.”
Coming to “credit cards, debit cards and prepaid payment instruments (PPIs)”, Wison says, “This is the one sector which seen a remarkable year-to-year growth of 65% during the last financial year. This growth is basically driven by a substantial jump in the debit card POS usage which shows a growth of 107%.”
“Of course, demonetization forced people to use their debit cards extensively for personal consumption expenses”, he says, adding, “But, we should remember that the total amount of Rs 7421 billion under the card payments is just over 5% of total retail payments of Rs 1,39,611 billion”, adding, “Both debit card and credit card usage are still around 4% of the retail pie.”
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