The Union Budget 2023-24 showed that the government’s financial support for the digital payments sector is expected to jump more than two-fold to Rs 2,137 crore in the current fiscal, compared to Rs 1,044 crore spent in FY22.
However, the government’s budgetary allocation for this item has remained stagnant at Rs 1,500 crore for the next financial year (FY24), for the third consecutive year.
The money allocated under digital payments is generally disbursed to banks as a subsidy for promoting unified payments interface (UPI) transactions. This subsidy is given because the government has restricted banks to charge users any transaction fees on UPI.
UPI has grown by leaps and bounds in the past couple of years as it facilitated transactions worth Rs 125.94 trillion in the calendar year 2022, jumping 4X from Rs 33.88 trillion in 2020.