The Digital India campaign launched by the Modi government is turning out to be highly fruitful. Transactions through unified payments interface (UPI) reached a new high with 1 crore transactions on Wednesday. This is a thirty-fold increase from the June previous year when there was 1 crore transaction in a whole month. UPI is an instant real-time payment system launched by the government of India to facilitate hassle-free digital transactions. The interface is regulated by the Reserve Bank of India and works by instantly transferring funds between two bank accounts on a mobile platform. It is an umbrella organization for all public and private retail payments in the country. The major private players which operate on UPI are Google’s Tez, Paytm, PhonePe, Amazon Pay, and the public sector player is BHIM (Bharat Interface for Money) launched by PM Modi on December 30, 2016. The UPI and BHIM app both were developed by National Payments Corporation of India (NCPI) which is promoted by the country’s central bank, the Reserve Bank of India.
The BHIM app which was launched a month after demonetization played an important role in stimulating digital transactions in the country. In May, around 189.5 million transactions, amounting to Rs 33,289 crores, were conducted through the UPI platform. Of these, 14 million transactions amounting to Rs 5,748.5 crore took place through the BHIM platform. Till now, there have been more than 27 million downloads of the BHIM app on Android platform and around 1.4 million downloads on iOS platform. The combined effect of JAM (Jan Dhan-Aadhaar-Mobile) trinity coupled with RuPay played a huge role in providing digital banking access to people of India. The Modi government has gone step by step to improve mobile banking in India. First, it opened zero balance bank account to every person in India and linked it with mobile number and Aadhar Card. Along with zero balance bank accounts, banks gave RuPay card to the people for enabling mobile transactions. The RuPay is a domestic card payment system developed by NCPI to reduce the dependency on foreign companies for card transactions. The RuPay card is now accepted at all the ATMs, Point-of-Sale terminals and most of the online merchants in the country. More than 300 cooperative banks and the Regional Rural Banks (RRBs) in the country have also issued RuPay ATM cards.
After that, the government launched the Unified Payments Interface to facilitate mobile banking transaction between any two accounts. It thereafter took the decision of demonetization which compelled people to move to digital transactions due to a shortage of cash. Almost one and a half month later came the BHIM app to make mobile transaction accessible to common people of the country. The result of these series of decisions to curb black money and increase the digital transactions has been overwhelming. As per NCPI data in the last one year, the monthly UPI transaction volume has risen by around 2,000%. Dewang Neralla, chief executive, Atom Technologies Ltd, a payments service provider said “Most of the UPI transactions are person-to-person (P2P) transfers. The incentives given to consumers in the form of cash back, by the government on P2P payments and by e-commerce companies during the purchase of goods and services have significantly promoted its usage.” At the time of launch in August 2016, only 21 banks offered UPI, now the facility is offered by about 101 banks.
The order in which things took place shows that the decision of demonetization was a well thought out one. The government first created the infrastructure to reap benefits of demonetization and then announced the decision. The combined effect of demonetization helped India in its fight against black money. According to Economic Survey, the number of tax return filers increased from 6 million to 10 million in post demonetization period. Department of Financial Services Secretary Rajeev Kumar, tweeted “#NewIndia embracing digitization wholeheartedly. UPI transaction hits the milestone of 10M/day. The steady increase from 169 M (Dec17) to 236 M (May 18). An increase of 40% in 6 months. @digitalindia @pmoindia @finminindia.” These results show that the government’s decisions have helped to curb black money and it is moving in a positive direction to make India a cashless economy.