An Insight in the #Baniyanomics framework to provide a clear, relatable analysis of India’s economic performance for FY 2024-25, with projections for FY 2025-26. Using the metaphor of a “Baniya” (A Hindu entrepreneur associated with trade, commerce, and finance), it simplifies complex economic indicators such as Gross Domestic Product (GDP), Unified Payments Interface (UPI) transactions, cash in circulation, Goods and Services Tax (GST) revenues, and economic growth projections. The report also explores potential policy shifts, including demonetization, based on provided data and recent economic trends. The analysis highlights India’s robust digitalization, fiscal health, and sustained growth, positioning it as a global economic leader.
Key Economic Indicators
Gross Domestic Product (GDP)
- Nominal GDP (FY 2024-25): USD 4.2 trillion (353 lakh crore INR at an exchange rate of 84.09 INR/USD).
- Real GDP Growth: Estimated at 6.4%, down from 8.2% in FY 2023-24, reflecting challenges like election uncertainties, excessive rainfall, and global trade volatility.
- #Baniyanomics Insight: Imagine India’s economy at 353 lakh crore units of value annually, from agricultural produce to cutting-edge software. Despite a slight slowdown, it remains one of the world’s fastest-growing economies, driven by services, industry, and infrastructure investments.
India’s USD 4.2 trillion economy is the fourth-largest globally by nominal GDP and third-largest by purchasing power parity (PPP). The Economic Survey 2024-25 notes a Q2 slowdown (5.4%) due to election-related disruptions and heavy monsoon rains, which impacted construction and mining. However, a rebound is anticipated in the second half, driven by agriculture (3.8% growth), industry (6.2%), and services (7.2%). Government capital expenditure, up 10.1% to 11.21 lakh crore INR, supports infrastructure projects like highways and railways, bolstering economic resilience. The services sector, including IT and finance, remains a key driver, while manufacturing benefits from initiatives like Make in India.
Unified Payments Interface (UPI) Transactions
- Total Value: 25.88 lakh crore INR (185.8 billion transactions, a 41.7% increase from 131.1 billion in FY 2023-24).
- Share of Payment Volume: UPI accounts for 83.4% of total payment volume, up from 79.4% last year.
- #Baniyanomics Insight: Picture 70% of all purchases being paid via mobile apps, weaving a digital thread through India’s economy. UPI’s dominance reflects a robust digital payment ecosystem, reducing cash reliance and boosting financial inclusion.
In May 2025, UPI recorded 11,617.6 million transactions worth 15.99 lakh crore INR, highlighting its role as a cornerstone of India’s digital economy. Initiatives like Digital India and the adoption of e-Rupee, a central bank digital currency (CBDC), have fueled this growth. UPI’s rise, coupled with a 29.5% decline in debit card transactions, underscores a shift toward mobile-based payments, particularly among younger demographics and rural areas, where smartphone penetration has surged.
Cash in Circulation
- Total Value: 38 lakh crore INR (approximately 10.8% of GDP).
- Key Insight: About 70% of transactions occur through banking channels (including UPI), signaling a strong shift toward digital payments, though cash remains significant in rural and informal sectors.
- #Baniyanomics Insight: Cash is less popular as digital payments take over. It’s a reminder of India’s dual economy, where urban areas embrace digital transactions, but rural markets rely on cash.
Cash in circulation has grown 120% since the 2016 demonetization, aligning with nominal GDP growth. However, the increasing dominance of UPI and the introduction of e-Rupee could further reduce cash dependency, especially if policy measures like demonetization or reduced INR 500 note circulation are implemented. The informal sector, which accounts for nearly 50% of employment, continues to rely on cash, highlighting the need for balanced digitalization efforts.
Goods and Services Tax (GST) Collections
- Total Revenue: 25 lakh crore INR (approximately 7% of GDP).
- Key Insight: A 23% increase in e-way bills (11.93 crore in April 2025) indicates robust trade activity and economic formalization.
- #Baniyanomics Insight: GST is the tax collected on every economic activity, contributing 7% to the economy’s revenue. It’s the main source that funds roads, schools, and trains, keeping the economy strong.
GST collections rose 11.7% from FY 2023-24, reflecting increased formalization and digitalization of trade. This revenue stream supports government initiatives like the National Infrastructure Pipeline, which allocated 11.21 lakh crore INR for FY 2025-26. The growth in e-way bills, mandatory for goods movement, underscores the formal economy’s expansion, driven by policies like GST and digital invoicing.
Economic Growth Projection for FY 2025-26
- Expected Growth Rate: Approximately 7%.
- Projected GDP: 380 lakh crore INR (353 × 1.07).
- #Baniyanomics Insight: By FY 2025-26, the economy will be INR 380 lakh crores, growing steadily.
The Reserve Bank of India (RBI) projects 6.7% real GDP growth for FY 2025-26, with quarterly estimates ranging from 6.5% to 7.0%. This optimism stems from strong domestic demand, robust agricultural output due to favorable rabi crops and reservoir levels, and increased capital expenditure (38.8% growth since FY 2020-24). S&P Global forecasts India will become the world’s third-largest economy by 2030-31, with a consistent 6.7% annual growth rate, supported by structural reforms like GST and labor laws.
Policy Implications and Observations
Potential for Demonetization
- Rationale: The high share of digital transactions (70% through banking channels), a surge in UPI (185.8 billion transactions), and e-Rupee adoption suggest reduced cash dependency. Statements from influential figures like Chandrababu Naidu and potential reductions in INR 500 note circulation through ATMs increase the likelihood of a demonetization-like policy.
- Implication: Demonetization could accelerate digitalization and formalization, as seen in 2016 when 86% of currency was invalidated, boosting cashless payments. However, it risks short-term disruptions, particularly for the informal sector and rural areas.
Digital Economy and E-Rupee
UPI’s 25.88 lakh crore INR in transactions highlights India’s digital payment infrastructure, supported by initiatives like Digital India and the eShram portal, which registered 30.51 crore unorganized workers by December 2024. The scaling of e-Rupee aligns with global CBDC trends, reducing cash-related costs (estimated at 0.25% of GDP) and enhancing financial inclusion. This digital shift is critical for integrating rural and informal economies into the formal sector.
Fiscal Health
GST collections at 7% of GDP and a narrowing fiscal deficit (from 6.4% in FY 2023-24 to 5.6% in FY 2024-25) reflect robust fiscal health. This enables increased capital expenditure, funding projects like Vande Bharat trains, UDAN airports, and smart cities. The expanded tax base, driven by formalization and digitalization, supports long-term fiscal capacity for FY 2025-26.
#Baniyanomics Insights
The #Baniyanomics framework simplifies India’s economy:
- GDP (353 lakh crore INR) for FY 2023-24
- UPI (25.88 lakh crore INR)
- Cash in circulation (38 lakh crore INR)
- GST Estimated for FY : 2025-26 (25 lakh crore INR):
- Growth (7%): FY : 2025-26, GDP estimated at 380 Lakh Crore
Conclusion
India’s USD 4.2 trillion economy (353 lakh crore INR) in FY 2024-25 is increasingly digital, with 70% of transactions via banking channels, 25.88 lakh crore INR in UPI, and 25 lakh crore INR in GST. Projected to reach 380 lakh crore INR by FY 2025-26 at 7% growth, it’s poised for global leadership. Potential demonetization and reduced INR 500 note circulation could further digitalization, supported by UPI and e-Rupee. #Baniyanomics sees India’s economic growing bigger, more digitaleach year.
As one says Mota-Mota hisaab… apt term Baniyanomics