Paper Details

The introduction of the Unified Payments Interface (UPI) in 2016 marked a watershed moment for the Indian financial landscape. This research paper quantitatively assesses the impact of UPI on two critical pillars of economic development: financial inclusion and the growth of the digital economy. Using an ex-post facto research design, this study analyzes secondary time-series data from the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) for the period FY 2016-17 to FY 2023-24. The methodology employs descriptive statistics, Pearson correlation, and simple linear regression to establish the relationship between UPI transaction growth (independent variable) and key indicators of financial inclusion (bank account operability) and digital transactions (volume of retail electronic payments). The results reveal a strong, positive, and statistically significant correlation (r > 0.95) between the proliferation of UPI and the growth in retail digital payments. The regression analysis further indicates that UPI adoption is a significant predictor of the increase in the volume of digital transactions, explaining over 90% of the variance (R² > 0.9). While the direct impact on formal account ownership is contextual, UPI has demonstrably deepened financial inclusion by transforming dormant bank accounts into active transactional gateways. The paper concludes that UPI has not only been a catalyst for India's digital payment revolution but also a powerful instrument for furthering effective financial inclusion. Policy implications suggest a continued focus on enhancing digital literacy and strengthening cybersecurity infrastructure to sustain this momentum.

UPI, Digital Payments, Financial Inclusion, Digital Economy, FinTech, NPCI, RBI.