Spending through credit cards and debit cards grew 77.8 per cent and 12.5 per cent to Rs 1.05 lakh crore and Rs 3.49 lakh crore, respectively, in April. The rise in spending, along with rising UPI-based payments, indicates an increase in consumption as pandemic-induced restrictions ease and uncertainty looms, Finance Ministry Said on Monday.
“Value of UPI transactions processed through National Payments Corporation of India India (NPCI) stood at Rs 10.4 lakh crore during May 2022, the highest since the launch of UPI in 2016, registering a month-on-month growth of 5.9 per cent, while the UPI transaction volume stood at Rs. has increased to 599 crores. at 7.4 per cent,” the ministry said in its monthly economic report for May 2022.
It added that the upward trend in value and volume of UPI transactions occurred after the outbreak of the pandemic as people became more accustomed to the online payment mechanism. In addition, recent initiatives by RBI such as the launch of UPI123Pay for 400 million feature phones (which allows all transactions to be processed without an internet connection), UPI Lite (to process low value transactions) ) and UPI AutoPay has also helped NPCI. It will further facilitate achieving the target of achieving record transactions and processing one billion transactions a day on its platform.
UPI Autopay allows customers to facilitate recurring e-mandate using any UPI application for recurring payments like mobile bill, electricity bill, EMI payment etc.
“This marks a permanent behavioral reset as the pandemic subsides. Currently, UPI is linked to the savings accounts or current accounts of the customers through debit cards. On June 8, 2022, RBI also allowed linking of UPI with credit cards to provide more opportunities and convenience to customers in making payments through UPI,” the report said.
The RBI allowing credit cards to be linked with the Unified Payments Interface (UPI) will enable more people to make payments using the popular platform. Currently, UPI facilitates transactions by linking savings or current accounts through debit cards of users.
The Finance Ministry report said that the increase in industrial and service activities has increased the consumption of electricity and fuel in the economy. Rising summer heat has also contributed to the increase in power consumption, while stalled consumption demand has added to the increase in fuel consumption, especially with respect to contact-based services. “Given tight supply conditions for domestically produced coal and high global energy prices, the economy’s import burden continues to grow as industrial and service activities increase in the economy.”
The report noted that in advanced economies (AEs), liberal stabilization policies have affected the prices of the entire consumption basket. Whereas, in EMEs, imported inflation is only in respect of certain goods on which these economies are net import-dependent. However, over time, imported inflation in EMEs (emerging market economies) can also spread to other commodities through interlinkages in the consumption basket, making retail inflation more widespread.