Digital payments up by 55% after demonetisation: NITI Aayog

After the government announced the demonetisation of high value currency, there has been a significant rise in digital transactions. Digital payments recorded 55 per cent increase in 2016-17. Niti Aayog Principal Advisor Ratan P Watal recently said that the trend is likely to continue in the coming years indicating that India is at 'the cusp of revolution' in this area.

The volume of overall digital payments, Watal further said, recorded a compounded average annual growth rate of 28 per cent from 2011-12 to 2015-16.

"These figures are truly reflective of the fact that India today stands at the cusp of a digital payments revolution," he said at an event organised by industry body Ficci.

"Due to innovations in digital payment technologies and increasing consumer satisfaction, the growth trends in digital payments are positive and will continue to dominate the payments landscape in India," he said.

The government had demonetised high value currency (Rs 500 and Rs 1,000 notes) last November and has been promoting a less cash economy through greater push on digital payments.

Watal further pointed out that retail payments accounted for as much as 98-99 per cent of the total volumes.

Referring to a recent article of former finance minister P Chidambaram that digital payments have declined post demonetisation, Watal said that his analysis was based on selective RBI data and does not reflect the true picture.

"In his article former finance minister P Chidambaram stated that the surge in digital Payments, post demonetisation was temporary as cash was not readily available. Once cash was available, the surge in digital Payments tapered off He used RBI data to substantiate his hypothesis.

"This was examined in NITI Aayog in consultation with RBI dispassionately," Watal pointed out.

He said this data is published for a few select payment system indicators only and includes card transactions of only 4 major banks.

"The data therefore referred to a subset of the entire spectrum of Digital Payments. Hence the conclusion that was drawn may not have given the true picture," Watal asserted.

The government had set up the Committee on Digital Payments under the chairmanship Watal. The committee submitted its final report in December 2016 to Finance Minister Arun Jaitley.