The Bloomberg report has recently stated that India has now become the fifth largest economy by surpassing Britain. It is nothing short of a remarkable story of India’s exponential progress that it has beaten its former coloniser. With the firm belief to rise to the top of the table, India’s rise is a glorious story in the economic history of the world. Where Europe is in a complete economic coma due to stagnation, India is writing a new story of development every single day.
UPI Transactions Are At All Time High
In the recent monthly data of the Reserve Bank of India (RBI), it was revealed that India has set new records in payment transaction data. The data released by the RBI states that, the Unified Payments Interface (UPI) processed more than Rs 10.73 lakh crore worth of transactions in August 2022. This is a whopping 68% increase from last year. The transaction value processed by the UPI as of August 2021 was approximately Rs 6.40 lakh crore.
Further, the National Payment Corporation of India (NPCI) data states that in the month of August 2022, India processed about 657 crore transactions whereas, in August 2021, the processed transactions volume was around 355 crore. The transactions value of UPI jumped up 85% from August 2021.
| Month-Year | Volume (in Mn) | Value (in Cr.) |
| August-2022 | 6579.63 | 10.72.792.68 |
| August-2021 | 3,555.55 | 6,38,116.95 |
Indians are on a Spending Spree
The exponential rise in the transaction volume and value is a testimony of India’s spending potential. It is the result of India’s growing purchasing capacity which has ensured a V-shaped economic recovery, after the Pandemic.
It is important to understand that the 68% growth in transaction value reflects two major components of the Indian economy. One, people now has completely come out of the shock of the Covid crisis and is ready for spending. It shows that consumers now have both confidence as well as money to spend, in comparison to the uncertain times in covid where people were forced to go for savings, presence of widespread unemployment and limited cash availability.
HT Solanki, general manager of Bank of Baroda, explaining the growing spending said, “Good monsoons, post-Covid normalization of economic activities, pick-up in manufacturing and services, stabilisation of inflationary pressures, a well-capitalized financial system-all together brighten the outlook for an increase in demand for retail loan products and increased consumption”.
Second, the 85% exponential rise in the volume of UPI transactions also speaks volumes about India’s aspiration to become a digital economy. It is a matter of great joy that people are now very accepting to transact online. People are no longer hesitant to accept or pay online because to the UPI system’s increased security. The digital economic system has created a completely transparent and accountable economic structure, in which tax evasion is extremely limited. In a way, digital payment has provided an efficient economic system in the country.
Europe at free-fall
On the other hand, Europe’s economic system is in complete collapse. The Covid lockdown had already shattered the backbone of the European economy, and the Ukraine war had driven them into the deep Antarctic Ocean.
As a result of hefty sanctions, Russia has nearly shut down its gas supply to Europe, making it harder for western countries to breathe in the economic disaster. Due to Russia’s gas embargo; European countries are finding it difficult to identify alternative supplies of Russian gas. The recurring effect of rising energy prices has begun to be reflected in essential commodities. Inflation is at an all-time high, unemployment is rising, the GDP rate is creeping up, and Europe’s economy is in shambles. Furthermore, the European continent has been hit by a drought.
Also, as the world approaches recession, the fact that India has such a high consumption value is encouraging. The transaction data shows that India’s economy is primarily driven by the country’s own consumption. The large population and consequent consumption will keep the economy’s supply and demand scenario intact. Also, the increasing purchasing power will have a significant impact on expanding the size of the economy.
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