Increase in spending by credit cards, debit cards, UPI indicates a recovery in consumption: FinMin

Spending on credit cards and debit cards in April jumped 77.8% and 12.5% ​​to Rs 1.05 lakh crore and 3.49 lakh crore, respectively. The increase in spending, along with the rise in IPU-based payments, point to a recovery in consumption as pandemic-induced restrictions ease and uncertainty diminishes, the finance ministry said Monday.

“The value of UPI transactions processed through the National Payment Corporation of India (NPCI) stood at Rs 10.4 lakh crore in May 2022, the highest since the launch of UPI in 2016, registering a monthly growth of 5.9%, while the volume of UPI transactions stood at 599 crores, increasing month-on-month by 7.4%,” the ministry said in the May 2022 monthly economic report .

He added that the upward trend in the value and volume of UPI transactions followed the outbreak of the pandemic as people became more accustomed to the online payment mechanism. In addition, recent initiatives undertaken by the 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 (for processing low value transactions) and UPI AutoPay also helped NPCI achieve record transactions and will further facilitate the achievement of the goal of processing one billion transactions per day on its platform.

UPI AutoPay allows customers to facilitate recurring electronic money orders using any UPI app for recurring payments such as mobile bills, electricity bills, EMI payments, and more.

“This marks a permanent reset in behaviors with the decline of the pandemic. Currently, UPI is linked via customers’ debit card to their savings or checking accounts. On June 8, 2022, RBI also authorized the linking of UPI with credit cards to provide more options and convenience for customers to make payments through UPI,” the report states.

The RBI allowing credit cards to be linked to the Unified Payments Interface (UPI) will allow more people to make payments using the popular platform. Currently, UPI facilitates transactions by linking savings accounts or checking accounts through users’ debit cards.

The report from the Ministry of Finance indicates that the growth of industrial activity and services has led to an increase in energy and fuel consumption in the economy. The increase in summer heat also contributed to an increase in electricity consumption, while the release of pent-up consumer demand, particularly in relation to contact services, added to an increase in consumption. fuel. “Given the tight supply situation for locally produced coal and high global energy prices, the import burden on the economy is becoming relentless as industrial and service activities increase in the economy. “

The report indicates that in advanced economies (EA), liberal stabilization policies have had an impact on prices across the consumer basket. Whereas, in EMEs, imported inflation concerns only a few basic products on which these economies are net dependent on imports. However, over time, imported inflation in EMEs (emerging market economies) can also spread to other commodities through interconnections in the consumer basket, making retail inflation more generalized.

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