Digital boom hasn’t killed cash as currency-to-GDP ratio rises again to 11.4%

New business data points to the fact that India’s rapid shift to digital payments has done little to dislodge cash from the economy, with currency held by the public rising faster than nominal GROSS DOMESTIC PRODUCT in FY26 even as UPI transactions continued their expansion.

Currency with the public rose 12 percent to Rs 40.65 lakh crore at the end of FY26, up from Rs 36.31 lakh crore at the end of the previous year.

Nominal GROSS DOMESTIC PRODUCT rose around 8 percent to Rs 357.14 lakh crore in FY26 from Rs 330.68 lakh crore in FY25, according to calculations based on the old 2011-12 base year.

As a result, currency with the public as a share of GROSS DOMESTIC PRODUCT rose to 11.4 percent in FY26 from 11 percent in FY25, reversing some of the slide noted over the preceding few years.

The ratio stood at 11.3 percent in FY24 and 12.2 percent in FY23.

The numbers suggest that the extraordinary expansion in digital payments, particularly UPI, has not translated into a corresponding slide in Indians’ demand for cash.

The trend is additionally visible in more recent data.

UPI transaction volumes grew 22.5 percent year-on-year in August 2026, while currency with the public expanded 12.8 percent over the same period.

Currency expansion has accelerated during the past year even as the pace of UPI expansion has moderated.

Currency with the public grew around 4-6 percent for much of 2023 and the first half of 2024. It rose to 9.3 percent in August 2025 before climbing further to around 12-13 percent in the first eight months of 2026.

UPI transaction volumes were growing by more than 50 percent year-on-year during much of 2023 and around 40-60 percent during 2024. Expansion moderated to around 25-35 percent through much of 2025 and stood at 22.5 percent in August 2026.

Cash returns after pandemic spike

India’s currency-to-GDP ratio has moved sharply during the past decade.

It stood at 11.1 percent in FY14 and increased to 11.6 percent by FY16 before dropping sharply to 8.2 percent in FY17, when demonetisation happened.

It advanced to a series high of 13.9 percent in FY21 before declining for four consecutive years to 11 percent in FY25.

The gain to 11.4 percent in FY26 marks the first climb in the ratio since FY21.

Importantly, the current cash intensity of the economy is not very different from where it stood more than a decade ago. Currency with the public was equivalent to 11.1 percent of GROSS DOMESTIC PRODUCT in FY14, compared with 11.4 percent in FY26.