UPI transactions have moved up 70 times in last 4 years: Report

Indian consumers now prefer convenience in payments through the click of a button and the vast quantity of information that is produced as a passive by-product of the use of such UPI transactions holds a great promise as a transformative resource for real time policy and evidence based policy making, said the report authored by Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.

Indian consumers have now migrated big time to better technology platform like UPI that does not require the intervention of a POS machine and factor authentications, it said.

First time since 2014, currency in circulation has remained constant over the previous year even as record purchases happened during Diwali at Rs 1.25 lakh crore, according to a report, it noted.

As per the report, as convenience in payments takes centre stage, the future will evolve increasingly towards use of huge swaths of data through use of Artificial Intelligence and Machine Learning by Banks to redefine financial intermediation and this will imply further scaling up of large investment in Cloud Platforms

This might also necessitate regulatory interventions of both Central Banks and Government so that database can be harnessed and stored and also used for real time policy making, the report observed.

"The formalization efforts are bearing major fruit in terms of currency or GDP ratio. We estimate that without pandemic GDP collapse, CIC/GDP ratio would have been 12.7 per cent in FY21, as against 12.4 per cent in FY11. Tax/GDP ratio did jump between FY16 and FY19 but has declined since then reflecting direct tax changes in FY19 budget :Tax/GDP has risen in the pandemic years," the report said.

"Our estimate also shows that because of the pandemic people may have been holding as much as Rs. 3.3 lakh crores in cash for precautionary motive beginning FY21. If we adjust for such currency transactions, the currency to GDP ratio for pure payment purposes may have actually declined in FY21 compared to earlier years," it added.