The central bank of India has unveiled its ‘Every Payment Digital’ initiative – part of Digital Payments Awareness Week (DPAW) 2023 – to encourage Indian consumers to use digital payments.
The Reserve Bank of India’s (RBI) Governor Shaktikanta Das is appealing to all stakeholders – banks, non-banks, payment system operators and digital payment users, among others – to adopt digital payments and extoll the merits of using digital payments.
He said the campaign reinforces RBI’s commitment to deepen digital payments in the country. “India’s payment systems are talked about globally and several countries have shown interest to replicate India’s success story,” he said.
Stating that payment systems in India have seen over 10 billion transactions every month since December 2022, he said: “This speaks volumes of the robustness of our payments ecosystem and acceptance by consumers.”
UPI has emerged as the most popular and preferred payment mode in India pioneering Person-to-Person (P2P) as well as Person to Merchant (P2M) transactions in India accounting for 75% of the total digital payments, the Governor said.
He added that “the convenience of digital payments would facilitate onboarding of new consumers into the digital fold”.
Support adoption of digital payments
“Various campaigns highlighting the digital payment channels available are being planned by the banks and non- bank payment system operators. This will further encourage and support the adoption of digital payments in the country,” he said.
He said that growing customer confidence in using digital payments would lead to more and more people adopting this method of concluding transactions. He said: “The message is in sync with the Payments Vision 2025 of the RBI – that is e-payments for everyone, everywhere, every time”.
He said RBI has also decided to initiate a 75 Digital Villages programme through adoption of 75 villages and involvement of village level entrepreneurs.
“Under this programme and in observance of 75 years of independence, PSOs will adopt 75 villages across the country and convert them into digital payment-enabled villages. They will conduct two camps in each of these villages to enhance awareness and onboard merchants in the village for digital payments,” he added.
The slowdown in GDP growth ‘is temporary’
Latest government data shows India’s gross domestic product (GDP) growth slowed to a three-quarter low of 4.4% in October-December 2022, mainly due to contraction in manufacturing and low levels of consumer spending.
Moody’s Analytics said India’s domestic economy, rather than trade, is the main driver of growth and the slowdown in economic activity late in 2022 “will only be temporary”.
While manufacturing shrank by 1.1%, expenditure by consumers slowed to 2.1% in the October-December quarter of the current fiscal.
The analyst firm said growth slowed substantially on the previous 12 months, with private consumption lagging overall GDP for the first time since the Delta wave of Covid-19 struck the economy in the second quarter of 2021.
“Our take is that the slowdown late last year will be temporary and even salutary, helping to wring some of the demand-side pressures out of the economy without stopping it wholesale,” it said, adding that better growth in the US and Europe’s slow recovery will boost India’s economy by the middle of this year.
The US and Europe are India’s largest trade partners and are important destinations for exports.
Moody’s Analytics said the slowdown in GDP growth in the final quarter of 2022 was in stark contrast to the 11.2% growth witnessed in the same quarter of last fiscal year.
In the current one, the economy grew 13.2% in the April-June quarter and 6.3% in the July-September quarter.
Sectors such as manufacturing and agriculture that are dependent on consumer spending either contracted or saw little growth during December quarter of the current fiscal period.
More buoyant sectors such as construction and the retail/wholesale trade sectors performed better, though both lagged gains from earlier this year.
“While high interest rates have slowed the domestic economy and curbed imports, external imbalances have widened, putting pressure on the rupee and adding to inflation,” Moody’s Analytics’ report said.
In the current fiscal year (2022-23), GDP is expected to grow by 7%, in line with official estimates. This would require about 5% GDP expansion in the fourth (January-March) quarter.