Payments Signaling Revival in Consumption

Mumbai: Payment statistics are signaling a revival in private consumption.Spending through unified payments interface (UPI) during the festival period (Dussehra to Diwali) increased to Rs 17.8 lakh crore, up from Rs 15.1 lakh crore from the previous year. In September, UPI witnessed a seasonally unadjusted month-on-month (MoM) increase of 2.6 per cent in value terms showing a pickup in payments value of major consumer goods categories such as men’s and women’s clothing outlets, online marketplaces, electronics, beauty and barber establishments and liquor shops.

Interestingly debit card values also picked up during the festival months even as UPI was more of a preferred choice for consumers. The payment in value terms through debit card during this festival month went up to Rs 65,395 crore compared to Rs 27,566 crore in the same period of previous year. Barring the current year, transactions through debit cards had been decelerating. Payments through credit cards saw some cautious pruning down during the current period. Interms of average spending per transaction, debit cards fared far better than UPI. During the festive period, the average spending per transaction for UPI was Rs 1,052 whereas for debit card it was Rs 8,084 and for credit card at Rs 1,932.

The government has estimated Rs 20 lakh crore boost in consumer spending due to the GST 2.0.

“Since the timing of GST is finely aligned with festival period and supportive macro fundamentals in terms of a benign headline inflation, better sowing and a supportive monsoon, we expect household spending to get a major push,” said Dipanwita Mazumdar, economist at Bank of Baroda in a report titled ‘Consumption through lends of spending’.

“Payment statistics are signalling a revival in private consumption. The Q2 FY26 consumption is expected to print strongly positive, with momentum likely to continue into Q3. October data will reflect the full GST benefit impact,” added the report.