New Delhi: The Reserve Bank of India (RBI) in a report stated that cash remained king when it comes to consumer expenditure. With 60 per cent of transactions still being made by consumers in cash, rupee notes remain the mode of choice for transactions in India. However,l digital transactions are catching up with online payments doubling to 40-48 per cent in March 2024 from 14-19 per cent in 2021.
Why cash remains king
A cash usage indicator (CUI) devised by RBI’s Pradip Bhuyan showed that the share of cash in private final consumption expenditure fell to 52-60 per cent in the March quarter of 2024 from 81-86 per cent in the March quarter of 2021. While cash usage remains strong CUI indicates a downtrend in the preference for cash in transactions, said Bhuyan.
This is underlined by the jump in share of UPI transactions to 87 per cent from 51 per cent in 2021 in volume terms for person to merchant transactions. In value terms, UPI’s share rose to 69 per cent from 33 per cent during the period under consideration.
To be sure, UPI has also become a major substitute for cash when it comes to smaller value transactions, according to Bhuyan. Another key factor attesting to the substitution of cash with UPI is the moderation in the ratio of currency with the public to the GDP.
