The month of March reminded us that the pandemic is not over yet, with a sudden dramatic surge, especially in Maharashtra where active cases surpassed the peak last seen in September. This year the government is steering clear of an all-out lockdown, but growth will stumble as local authorities set restrictions on activity, and more cases result in lower productivity. The overall impact on the economy will of course depend on the duration and severity of this wave across the country.
Even as the economy faltered, outstanding growth in digital payments last year pushed India into the top spot globally, beating China as consumers opted for the convenient payment options. The value of UPI transactions made a record of over Rs 5 lakh crore in March. However, the Reserve Bank of India (RBI) ran up against payment providers unprepared to meet the deadline to comply with regulations towards customer protection and data security. The deadline for the framework for e-mandates of recurring online transactions has now been extended till September 30, 2021 while the deadline for implementing a framework like tokenization on card transactions has been extended to December 31, 2021. While the payment providers had requested extensions citing unpreparedness due to last year’s disruptions, the language in the RBI notifications is uncharacteristically stern, time for the service providers to get their act together within the updated timeline.
The pandemic has focused attention on the cracks in the financial inclusion mission worldwide. For instance, agent networks in rural areas have been under stress and CGAP’s Nitish Narain, Gayatri and Christopher Blackburn have a blog post out on experiences in India and other countries bringing out the strengths and the weaknesses in the system at the last mile that need to be fixed.