Diwali + GST cuts: UPI is poised for a record ₹28 lakh crore October
If the checkout line moved from the mall to your phone this Diwali, you’re not alone. India’s favourite payment habit—UPI—looks set to notch its biggest month ever in October, with multiple analysts pegging the total value north of ₹28 lakh crore. As of Oct 25 (IST), the daily run-rate is tracking ahead of September by a healthy margin, thanks to festive shopping and a tax tailwind.
The short version
UPI’s average daily value in October has climbed roughly 13% versus September, to around ₹94,000 crore—enough to challenge the all-time monthly high if momentum holds through the post-Diwali tail. That’s on top of a hefty September baseline of ₹24.9 lakh crore.
What changed this month?
A bigger festival wallet. Diwali is peak consumption season, and this year’s retail activity has been hot across categories—from electronics to jewellery—fuelled by promotions and wider acceptance of digital payments. Several trade and media reports describe a “blockbuster” festive cycle.
GST rate cuts lowered friction. The government’s simplification push—collapsing slabs and cutting rates in September/October—has reduced sticker shock on many goods/services and, arguably, nudged discretionary purchases right before the festival window. While the fine print varies by category, the direction of travel is clear: lower GST in many baskets, with a high slab preserved for luxury/sin goods.
Digital is the default. RBI-linked summaries for H1 CY2025 put UPI at the heart of retail digital payments by volume (dominant share), reflecting a mature, always-on habit loop—scan, pay, move on. That structural shift amplifies every seasonal bump.
The numbers to watch
- September 2025 baseline: ₹24.90 lakh crore in value on 19.63 billion transactions. That’s already near the peak zone.
- October daily run-rate: ~₹94,000 crore per day, +13% over September’s average, with Diwali-week volume spikes (reports cite ~740 million transactions on Diwali eve).
- Implied monthly potential: If the post-festive tail holds near current pace, crossing ₹28 lakh crore for October is plausible. Multiple outlets flag this as the threshold to beat.
Why it matters for India
Merchants feel the lift. Lower MDR on UPI rails and wide QR acceptance mean neighbourhood stores can ride peak demand without complex POS setups. That broad base is why festive demand translates so directly into UPI throughput. (RBI and ecosystem trackers consistently note UPI’s dominance in transaction volumes.)
Policy tailwinds meet product-market fit. GST reductions improved affordability just as the festival cycle began. Pair that with a payment UX the country already trusts, and you get a multiplier.
Signal for the next wave—credit on UPI. A bigger base of active users/merchants sets the stage for scaled rollout of UPI-linked credit products (like RuPay CC on UPI and pre-sanctioned credit lines), potentially boosting ticket sizes over the next 6–12 months. (Note: specific October credit-line shares aren’t disclosed yet.) Status: announced/expanding; October splits not disclosed as of (IST).
What could still derail a record?
- Data revisions: NPCI’s final October report will be the single source of truth. Mid-month estimates can overshoot if the post-Diwali tail fades. Watch for: official October table.
- Supply-side stockouts: If inventories thin after Diwali, spending can normalize faster than expected, clipping the end-month curve.
- Policy nuance: GST impact is category-specific; persistent confusion or compliance lag could blunt the intended consumption boost.
Context: where we’re coming from
UPI has already hit a different kind of “saturation by habit.” By H1 CY2025, UPI accounted for the lion’s share of retail digital payment volumes, even if value share is lower due to small-ticket dominance—precisely why festival periods move the needle: you get both frequency and higher-value baskets at once.
September’s volume dipped slightly vs August even as value stayed heavy—suggesting resilience in ticket sizes. That backdrop makes October’s 13% daily value bump meaningful rather than seasonal noise.
Bottom line
With a stronger daily run-rate, a well-timed GST nudge, and India’s habit of scanning before spending, UPI crossing ₹28 lakh crore in October looks credible—pending NPCI’s official print. We’ll update this piece when the final October numbers drop.