Homework | India’s Digital Age: No Chaos Over Rs 2,000 Notes; At Cusp of 10 Billion Monthly UPI Transactions

India is at the cusp of 10 billion UPI transactions this month. That means 1,000 crore transactions done digitally in a month in a country of 135 crore people! This is why those who three weeks ago had expected chaos at the banks for the Rs 2,000 currency notes swap, have been proven so wrong.

The Reserve Bank of India (RBI) has said that in the past 20 days, since the four-month-long window was opened for people to return their Rs 2,000 currency notes to banks, over 50% of the notes are already back. In 85% of such instances, people simply deposited the money in the outgoing currency in their bank accounts rather than swap it for notes of another denomination. Hardly has anyone read reports of any chaos or long queues at banks across the country for this exercise. This underlines one key factor — India is now truly the world’s leading digital economy.

In May, India touched a record high of 9.41 billion UPI transactions, up almost 6% from the previous month. It was in fact a 58% year-on-year growth. This month, already in the first 10 days, India has crossed 3.2 billion transactions and it is expected that the country could be at the doorstep of 10 billion transactions in June. This is the sheer number of people scanning QR codes at the local sabziwala thela in their neighborhood to top coffee shops or sending across money to their contacts using UPI that has been linked to their bank accounts.

INDIA, THE WORLD LEADER

India took time to join the digital bandwagon, but since it has, the strides have been giant. Sample this: India’s nearly 9 billion UPI transactions in 2022 is more than the ‘real-time’ digital payments done in the next four countries combined. Brazil did about 3 billion digital transactions last year, China did only about 1.7 billion, Thailand was at 1.6 billion and South Korea was at 0.8 billion. Over 35 countries now want to adopt India’s UPI technology to offer it to Indian visitors and expatriates abroad. The biggest surprise was even Japan expressing interest in it.

PM Narendra Modi earlier this year said experts feel that at this rate, India’s digital wallet transactions could soon overtake the cash transactions. This would be a big leap from 2016, when UPI-BHIM was launched under the Modi government. “Many people ask what demonetization in 2016-17 achieved — one of its biggest impact was people adopting digital payments in a big way and shedding their habit to use cash. This became even more evident and helpful during the Covid period between 2020 and 2022,” a top government official told News18.

It was the widespread use of digital payments that gave the government the confidence last month to announce that it would scrap the Rs 2,000 denomination notes and gave people a window between May 23 and September 30 to either deposit these notes in their bank accounts, get them swapped at banks or use them as legal tender elsewhere. The ultra-smooth way the exercise has panned out, surpassing expectations of many in the government with over half the notes already back with the banks within 20 days, shows India has moved well into the digital age.