Digital gains after demonetisation overstated: RBI data

The Reserve Bank of India (RBI) data shows that Niti Aayog overstated digital transaction volume and value gains, which have not even doubled across a range of digital channels in March 2017 as compared with October, the month prior to demonetisation.
On Friday, Niti Aayog in a statement on “Digital Payment Revolution: Facts & Figures” said that post-demonetisation “volume of all digital transactions had increased by about 23 times” with 63,80,000 digital transactions for a value of Rs 2,425 crore in March 2017 compared to 2,80,000 digital transactions worth Rs 101 crore till November 2016.
However, an analysis of the RBI data on digital transaction volume and value in March 2017 (latest available data) as against that of October 2016 shows that the overall volume had gone up just 1.43 times (see table). TOI spoke to Anna Roy, adviser (DAMD), Niti Aayog, who was in charge of preparing the statement, about “the 23 times’ gain”.
She said the numbers were provided to them by the National Payments Corporation of India (NPCI). When told that the numbers were too high and the data showed that actual gains were much lower, she replied, “I agree with you”.
Going by the RBI data, the 23 times’ increase is only for Unified Payments Interface (UPI) volume and value gain and not for “all digital transactions” as stated. For perspective, UPI volume in March 2017 was just 0.69% of overall digital volumes and 0.015% of overall digital transactions value.
“The numbers have been reconciled and double-checked by our IT department,” said Amitabh Kant, CEO, Niti Aayog, on Saturday. On Monday, one of his team members said they will look into the data and it could have been a “typographical error,” but said the intention was to point out that consumer-facing digital numbers have grown.
While the numbers have grown in the days since demonetisation, the overall growth is much lower than stated even for only consumer-facing transactions like card usage at PoS terminals and digital wallet usage, among others.
NPCI said the numbers it had shared pertained to UPI payments only and were correct. Apart from growth in UPI, other products under NPCI’s purview also witnessed growth. None of the figures shared by NPCI showed that growth exceeded the pre-demonetisation levels by more than twice. “Please note that these figures do not represent total digital transactions in the ecosystem,” the NPCI said in a statement.
According to the RBI data on the Electronic Payments System, NPCI is the source of data for digital payments like cheque truncation system, Immediate Payments System, National Automated Clearing House, Unified Payments Interface and Unstructured Supplementary Data Service (USSD). Rest of the digital transaction data are sourced from banks and the consolidated report is presented by the RBI.
Digital transactions volumes, after increasing in December 2016, declined across most channels in January and February before increasing again in March. As reported by TOI earlier, this gain in March was in large part due to year-end tax payments and investments by individuals. It remains to be seen whether this gain sustains in April and beyond.
“Even we have been tracking the data every month and we think that the 23 times’ gain is a bit too much. We were surprised when they announced it,” said an expert in the fintech industry.