Impact of Demonetisation and Covid-19 on Digital Transactions in India and Predicting The Trend
84 Pages Posted: 4 May 2023
Date Written: April 21, 2023
Abstract
The rise of digital transactions in India has been exponential in recent years, fueled by the government's push towards a cashless economy and the increasing adoption of mobile devices. However, the impact of demonetisation in 2016 and the Covid-19 pandemic has significantly affected the trajectory of this trend.
Trend analysis of the data reveals a steady increase in digital transactions volume, with a noticeable acceleration after demonetisation. The growth rate was even higher during the pandemic-induced lockdowns, as consumers turned to digital modes for their everyday transactions. Private banks, in particular, have witnessed a surge in mobile transaction volume in the last two years, with HDFC and ICICI leading the pack.
Using a time series forecasting model, it is projected that the growth in digital transactions volume will continue in the next five years, albeit at a slower pace. Public sector banks are expected to catch up with their private sector counterparts and witness a significant increase in mobile transaction volume.
However, the analysis also reveals several challenges that need to be addressed to sustain this growth trajectory. For instance, there is a need for improved digital infrastructure, especially in rural areas, to ensure that all sections of society can access digital payment systems. There is also a need to address concerns around cybersecurity and data privacy, which are critical for consumer trust in digital transactions.
In conclusion, the trend analysis and forecasting of digital transactions volume in India provide valuable insights for policymakers and businesses. While the trend is positive, it is crucial to address the challenges and create an enabling environment for sustained growth in the digital economy.
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