UPI, Card Payments Rise By Upto 18% In June: Signs Of Economy Revival In India?
A positive sign for an improvement in the economy as nearly all payment modes including cash, cards and Unified Payments Interface (UPI) have witnessed a sharp rise in volumes in the first three weeks of the month.
A Good Sign For Economy Revival
This shows that India’s business activities and consumer sentiment are reviving in June after a slump in April and May as most states were under lockdown as Covid-19 second wave hits the nation.
The Reserve Bank of India’s daily payments database also shows that the volumes on nearly all payment channels registered higher month-on-month growth in the first 21 days of June, against the same period in May.
The case of UPI, which is also now the most used real-time payment system in India recorded a growth of 12.3% in this period.
The other payment modes such as debit and credit cards recorded 12.7% and 18.6%, respectively, as per the data from RBI.
This data also includes payments made both digitally through net banking as well as physical point of sale (PoS) devices at storefronts.
Higher Spending In June
As per a report by ICICI Securities, “The trends of spending in June till date indicate ~18% jump compared to May 2021 (31% if we consider the third week of Jun ’21 over May’21). This also puts June 2021 spend trend at a higher level compared to all months of FY21 except March which is a seasonally strong month,”.
Apart from this, the payment snapshot for FY22-To Date (TD) revealed that the impact of the Covid-19 second wave has been significantly less than the first.
Interestingly, the same is true for all modes of payments including credit cards, as indicated by the report.
Rise In Cash Withdrawal
During the first 21 days of June, the cash withdrawals at teller machines across the country, a proxy for cash spend also registered a healthy uptick.
In volume, a total of Rs 1.01 lakh crore of currency was withdrawn in three weeks of June against Rs 95,318 crore, registering a growth of 6.4%, according to the RBI data.
This data include withdrawals made through both ATMs managed by banks as well as cash points maintained by business correspondents in rural India.
It seems that the surge in withdrawals is likely owing to increased business activities as states across India have lifted lockdown curbs in June.