UPI Dominates Festive Spending, Signaling Strong Consumer Demand Revival

A report from Bank of Baroda highlights that Unified Payments Interface (UPI) emerged as the top payment method during India's festive season, indicating a strong revival in consumer spending and demand. The value of UPI transactions rose sharply to Rs 17.8 lakh crore, compared to Rs 15.1 lakh crore in the same period last year, showing steady digital payment growth. Debit card usage also increased significantly, reaching Rs 65,395 crore, reversing a past trend of decline. Credit card transactions, however, showed restraint, suggesting a preference for direct digital or debit payments. The combined value of these transactions reached Rs 18.8 lakh crore, signaling an upbeat trend in retail spending. While UPI remains the choice for smaller transactions, debit cards led in average spending per transaction (Rs 8,084), followed by credit cards (Rs 1,932) and UPI (Rs 1,052). Spending grew across online marketplaces, apparel, electronics, beauty, and liquor shops, likely influenced by GST rate cuts and income tax benefits. The report concludes that private consumption demand is expected to be buoyant in the second and third quarters.

Impact: This news has a significant positive impact on the Indian economy and investor sentiment, suggesting strong economic activity and corporate earnings potential in consumer-facing sectors. Rating: 8/10.

Difficult terms: UPI: Unified Payments Interface, a real-time payment system developed by the National Payments Corporation of India (NPCI). GST: Goods and Services Tax, an indirect tax levied on the supply of goods and services in India.