UPI Everywhere But Cash Rising: What India’s Election Cycles Reveal About Political Cash Networks
Stand at almost any shop counter in India today and you will see the same sign: scan and pay. From metropolitan supermarkets to roadside tea stalls, retailers increasingly prefer digital settlement. They avoid the hassle of change, accounting becomes easier, and payments leave a clean record. Yet at the same time, official currency data shows physical cash in the economy steadily rising year after year. India looks digitally transactional but physically cash heavy. If everyday commerce has moved to phones, the obvious question is simple: who is holding the growing mountain of currency?
The Retail Economy Has Already Gone Digital with UPI
The shift in behaviour has been dramatic. Salaries arrive in bank accounts, bills are paid through apps, groceries are scanned, and even small vendors accept instant transfers. The speed and convenience of UPI have reduced the need to carry notes for daily consumption. Retailers themselves discourage cash because counting and reconciliation cost time. In many places, cash is not rejected but quietly deprioritised. When the primary layer of the economy stops demanding notes but the stock of notes keeps expanding, the demand must be coming from outside routine consumer activity.
Cash Exists Where Transparency Does Not
Cash still survives in parts of the economy where anonymity matters. Informal labour payments, small contracting networks, local services, and unreported adjustments continue to rely on physical currency. But these sectors are not new. They existed before digital payments scaled nationwide. What is new is the persistence of rising currency alongside a collapse in its everyday usage. Something beyond traditional informality appears to be sustaining demand for high volumes of notes.
India Is Almost Always In An Election
India’s electoral calendar no longer operates in isolated bursts. General elections, assembly elections and local body polls overlap across years. At any given time, political mobilisation is active somewhere in the country. Every election season brings familiar ground reports: sudden liquidity in local markets, enforcement seizures of unaccounted cash, and widespread voter claims of distribution networks. The pattern repeats across states and cycles, creating a periodic surge of cash visibility even while retail transactions remain digital.
The Redistribution Pattern
Large holders release currency during campaign phases. Recipients spend some and keep some. Markets absorb the spending, businesses collect the proceeds, and cash gradually reconcentrates into organised networks. Later cycles mobilise it again. This cycle does not establish origin, but it provides a mechanism explaining why currency demand remains structurally elevated even when daily purchases no longer require notes.
The Denomination Puzzle
Retailers frequently complain about shortage of small change despite record currency levels. High aggregate cash with low transactional availability suggests notes are being stored rather than circulated. When cash exists but is not visible in everyday exchange, it indicates holding behaviour rather than payment behaviour.
The Accountability Gap
Declared campaign spending often appears modest compared to what enforcement agencies seize during elections and what voters routinely describe locally. India’s financial system has deep audit trails for digital money but very limited transparency for cash movement in political mobilisation. The gap leaves a persistent blind spot between official disclosure and observed reality.
Questions That Need Answering
If consumers and merchants have shifted to electronic payments, why does physical currency continue to expand? Who requires large volumes of notes in a digital retail environment? How much election activity still relies on cash across repeated cycles? Should unusual regional cash movement automatically trigger forensic scrutiny? And can a modern digital economy remain fully transparent if a major financial channel remains largely untraceable?
