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Why 2021 was the best digital Diwali in past few years

NEW DELHI: With digital transactions growing exponentially, people now prefer convenience in payments through the click of a button, a report by State Bank of India (SBI) showed. Consumers have now opted for better technology platforms like United Payment Interface (UPI) that does not require the intervention of a POS machine. Digital transactions witnessed a massive jump in 2021 with consumers opting for easy payment options during the shopping spree week of Diwali. Even as record purchases amounting to Rs 1.25 lakh crore happened during Diwali, the latest currency in circulation (CIC) data showed that it remained constant over the previous year. Steady growth in currency Economists at SBI estimated that the Covid pandemic may have induced people to hold as much as Rs 3.3 lakh crore in cash for precautionary purposes in FY21. “If we adjust for such currency transactions, the currency to GDP ratio for pure payment purposes may have actually declined in FY21 compared to earlier years,” it noted. However, the almost steady growth in currency was overpowered with a significant increase in digital payments. Jump in digital payments The report showed that as many as 3.5 billion transactions worth Rs 6.3 trillion were recorded through UPI in the month of October. This is a jump of 100 per cent when compared to the same period last year. Transaction value also jumped nearly 103 per cent during the same period. Besides, data showed that UPI transactions jumped 69 times since 2017 — from Rs 1,700 crore to Rs 1,17,100 crore so far in 2021. Similarly, credit card spending rose manifold between 2012, when it was only Rs 1,500 crore. It then peaked at Rs 13,500 crore in 2020. The report added that credit card spends are on course to set a record this year as already YTD (year-to-date), it has reached Rs 13,300 crore. However, debit card transactions have commensurately stagnated indicating the preference and shift to UPI mode.

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