New Delhi: Digital payments grew 55% by volume and 24.2% by value in 2016-17 over the previous year, Ratan Watal, principal advisor of government think-tank Niti Aayog and former finance secretary claimed on Monday.
Watal’s comment comes amidst doubts raised by some commentators on the real growth rate of digital payments. He was speaking during the launch of a book, ‘Measurement of Digital Payments – Trends, Issues and Challenges’ prepared by Niti Aayog on Monday.
The book was launched at a seminar, ‘Digital Payments - Trends, Issues & Challenges’ organised by industry lobby group Ficci in collaboration with Niti Aayog.
Data from the Reserve Bank of India (RBI) seems to suggest that the rate of adoption of digital payments that accelerated following demonetisation (the invalidation of old high-value currency notes on 8 November) had slowed in recent months.
April saw total digital transactions of Rs109.58 trillion, down 26.78% from Rs149.58 trillion in March, according to data from RBI.
The number of digital transactions fell too, declining 4.56% from 893.9 million in March to 853.1 million in April. The highest volume was recorded in December, 957.5 million, according to RBI.
Watal isn’t convinced about the numbers.
RBI figures capture just a few select payment system indicators and includes card transactions of only four major banks and PPI (prepaid payment instrument) transaction of only 8 major non-bank entities and that too for goods and services only, he argued The data therefore referred to a subset of the entire spectrum of digital payments. Hence the conclusion that was drawn may not have given the true picture, Watal was quoted as saying in a statement sent out by Ficci.
“In April 2017, there has been again a significant growth in digital payments as compared to April 2016," Watal added.
The book released by Niti Aayog recommended that data on digital payments be disaggregated.
“Currently, data on digital payments is available only at an aggregate level, thus making it difficult to analyze the growth and effectiveness of individual digital payment technologies. We have proposed a classification for disaggregation -- according to service provider, payment instruments, payment destination, user, value, area, etc. Niti Aayog is working with the RBI towards data dissemination is such a metric format," Watal said.
Watal also mentioned that the outstanding stock of currency in circulation, which hovered around 12% of GDP between 2011-12 to 2015-16, declined to 8.8% during 2016-17, reflecting the impact of demonetisation partially offset by the ongoing re-monetisation process.
The government set up the Committee on Digital Payments under the chairmanship of Watal to suggest ways to encourage India’s movement towards a cashless economy. The committee submitted its final report in December 2016 to finance minister Arun Jaitley.