A decade after the Unified Payments Interface (UPI) was launched, it has rewired how Indians pay for everything from groceries to gold. Yet currency in circulation has hit a record Rs 41.7 lakh crore, presenting policymakers with what Reserve Bank of India Deputy Governor Shirish Chandra Murmu referred to as the “cash paradox”: a country paying digitally like never before, while stacking up more physical currency than ever.
The ambition was never modest. At the UPI pilot launch in April 2016, then-RBI Governor Raghuram Rajan declared: “I have said the Indian banking system needed a revolution. The revolution is upon us. The country has the most sophisticated public payment infrastructure in the world, which can be accessible to anyone who enters the system.”
The revolution delivered. UPI, built by the National Payments Corporation of India (NPCI) under RBI oversight, turned the mobile phone into a bank for hundreds of millions. Annual transactions exploded from 17.8 million in FY17 to over 241.62 billion in FY26; their value soared from Rs 7,000 crore to around Rs 314 lakh crore.
And yet, cash grew too.
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The cash-to-GDP ratio climbed from 8.7% in FY17 to a pandemic-era peak of 14.4% in FY21, before easing to 12% in FY26. The coexistence is now a headache for the central bank. Murmu said that it was making currency planning harder.
“Currency in circulation continues to grow at double-digit rates even as cash’s share of individual transactions declines, thanks to growing digital payment adoption,” Murmu said. “That combination makes future demand harder to predict, which complicates our planning for production and distribution capacity.”
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The headline numbers, though, mask a deeper shift in how cash is used.
“While cash in circulation is growing in absolute terms, it is actually declining when adjusted for inflation. At the retail level, there has been a structural shift from cash to digital payments, with cash now accounting for around 45-50% of private consumption expenditure, compared with about 65% earlier,” said Vivek Mandhata, Managing Director & Partner at Boston Consulting Group (BCG).
Overall consumption has expanded sharply, Mandhata said, while large pockets of the business economy still settle in cash — which is why the stock of currency keeps rising even as cash loses ground as a means of payment.
“Currency in circulation keeps growing, banks and retailers keep pushing into smaller towns, and the average ATM withdrawal is getting larger. Cash is a public infrastructure, still the default for much of the country and a lifeline for millions,” said Anush Raghavan, Chief Business Officer at CMS Info Systems.
Where UPI has routed cash decisively is in small-ticket spending. Person-to-merchant (P2M) payments account for 63% of UPI transaction volume, and 86% of these are valued below Rs 500, according to the Press Information Bureau (PIB). Person-to-person (P2P) payments, by contrast, make up 71% of UPI transaction value, reflecting their use for larger transfers.
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The ecosystem has scaled just as dramatically. Banks live on the platform jumped from 44 in FY17 to 703 in FY26, and UPI now accounts for 84% of India’s digital payments. Its footprint stretches well beyond India: as of 2025, UPI accounted for nearly 49% of global real-time payment transaction volume, according to the International Monetary Fund, and is operational in 11 countries, including the UAE, France, Singapore and Qatar.
“With over 660 million transactions processed daily, UPI has surpassed global payment networks, reinforcing India’s position as the world leader in instant, secure, and inclusive digital payments,” the PIB said.
A decade on, the verdict is clear — with an asterisk. India has become decisively more cashless. Cash-free remains a long way off.
This article was first uploaded on August twenty-four, twenty twenty-six, at nine minutes past eight in the night.
© The Indian Express (P) Ltd
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