Cash vs digital: Rethinking India's payment narrative

With the government reducing its incentive allocation for low-value UPI payments to ₹1,500 crore for 2024-25—less than half of the previous year's outlay—and a series of outages briefly disrupting the system, India's digital payments infrastructure is once again in the spotlight.

- Nikita Kwatra

These developments underscore how integral UPI has become to everyday transactions—and how much the system is relied upon to function smoothly, at scale.

The rapid rise of digital payments often reinforces the belief that India is steadily moving toward a cashless future. But the picture on the ground is more layered. While digital transactions have surged in recent years, this growth has not come at the expense of cash. Currency in circulation has more than doubled from ₹13.35 lakh crore in March 2017 to ₹35.15 lakh crore in March 2024 and still accounts for nearly 12% of GDP—comparable to pre-demonetisation levels. ATM withdrawals, too, remain substantial, holding steady at around ₹33 trillion annually since 2018-19.

This continued reliance on cash stands alongside the explosive rise of digital payments: UPI alone processed over 131 billion transactions worth ₹181 trillion in 2023-24, up from just 6.9 billion in 2017-18. The data points to a rebalancing. Digital systems have absorbed most of the new transaction growth—expanding the frontier by reaching new users, geographies, and enabling new kinds of transactions. Yet cash continues to serve a wide range of everyday needs, especially where trust, access, and infrastructure remain barriers to going fully digital. India's payment story is not one of replacement but of coexistence—marked by continuity as much as change.