India, amidst rapid technological advancement, stands at a critical juncture in its digital journey. The nation has demonstrably invested in the foundational pillars of digital financial services through significant infrastructure development, progressive policymaking, and public awareness campaigns — epitomised by flagship initiatives like Digital India, Jan Dhan Yojana, and Aadhaar integration. It has undeniably reshaped the financial landscape, particularly during and after the Covid pandemic.
The Department of Financial Services (DFS), Ministry of Finance, hosted the Digital Payments Awards ceremony on June 18, 2025, to recognise the strength of the nation’s digital payments ecosystem. It highlighted that nearly half of all real-time digital transactions in the world are happening in India with 35 crore active users being part of UPI system, and also that the country has an 87 per cent fintech adoption rate compared to 67 per cent globally.
However, this impressive digital façade hides a sobering reality: Over two-thirds of Indians who use digital devices struggle with basic digital banking transactions, highlighting the persistent challenge of bridging the digital literacy and access gap.
According to data from the Government’s Comprehensive Annual Modular Survey (CAMS-2022-23), only 31.7 per cent of people who use a digital device (mobile phone, computer, laptop, or tablet) are capable of carrying out digital financial activities like online payments. This isn’t just a gap — it’s a gaping blind spot, one that threatens to transform a well-intentioned digital revolution into a tool of exclusion.
Who can perform online banking transactions like digital payment (%)
|
Persons who are able to do so |
Persons who are unable to do so |
|
|
Place of residence |
||
|
Rural |
24.95 |
75.05 |
|
Urban |
43.48 |
56.52 |
|
Age groups |
||
|
Less than 15 years |
2.6 |
97.4 |
|
(15 – 25) years |
38.4 |
61.6 |
|
(26 – 35) years |
43.7 |
56.3 |
|
(36 – 50) years |
34.5 |
65.5 |
|
(51 – 60) years |
26.9 |
73.1 |
|
More than 60 years |
18.4 |
81.6 |
|
Gender |
||
|
Male |
39.9 |
60.1 |
|
Female |
21.1 |
78.9 |
|
Total |
31.79 |
68.21 |
Data source: Authors’ calculation using CAMS-2022-23, NSSO
Urban India, with its superior access to internet connectivity, banking facilities, and digital literacy programmes, reports a comparatively higher share of digital banking users — 43.48 per cent. However, even this figure highlights that over half of urban residents are still unable to use basic financial tools. The rural statistic is more alarming — nearly three-quarters (75.05 per cent) of the rural population cannot perform digital transactions. For rural India, digital inclusion remains a promise deferred.
Predictably, digital proficiency peaks among the youth. In the 26–35 age group, nearly 44 per cent can perform digital transactions. This is the working-age population, which is more likely to have smartphones, jobs with salary accounts, and exposure to digital ecosystems. Conversely, people above 60 show alarmingly low digital engagement.
Children under 15 are understandably out of the financial loop, hence the lower capability. However, the digital exclusion of the elderly — more than 81 per cent are unable to transact digitally — is concerning. Many senior citizens struggle with using digital apps, forget passwords, or fear fraud, leading to a reluctance to adopt online banking.
Perhaps the most troubling disparity revealed by CAMS data is the digital gender gap. While around 40 per cent of men can transact online, only 21 per cent of women can do so — a gap of nearly 20 percentage points. This isn’t merely about access to technology; it reflects entrenched gender inequality in education, employment, asset ownership, and digital autonomy.
In the lowest expenditure quintile (Q1), only 13.56 per cent of rural individuals are able to use online banking for digital payments, compared to 24.53 per cent in urban areas. This nearly twofold gap, though alarming in itself, is only a small piece of the broader disparity. The adoption rate increases steadily with expenditure in both rural and urban areas. However, the rate of growth is notably sharper in urban areas.
By the highest expenditure quintile (Q5), 61.91 per cent of urban individuals are able to use digital banking services — a figure that dwarfs the 37.71 per cent adoption in rural areas. But even in Q5 — where individuals theoretically have better access to smartphones, internet connectivity, and bank accounts — nearly two-thirds of rural residents are still not able to use digital banking.
This may indicate not just infrastructural issues but also a lack of trust, digital literacy, and support systems in rural settings.
The data paints a worrying picture: India is moving towards a two-speed digital economy — one inhabited by the digitally fluent who can transact, save, invest, and borrow; and the other by the digitally stranded, who remain dependent and are increasingly being left behind. This divide is not due to unwillingness but systemic barriers, which include linguistic exclusion, digital illiteracy, and cultural constraints.
India’s digital revolution must be reimagined to serve every Indian — not just the urban, young, male minority that currently benefits the most. To ensure inclusiveness, targeted interventions are needed. These can include rural digital literacy drives in local languages, special training for the elderly and simplified interfaces, empowering women with direct access to mobile technology and policies to include individuals in banking and tech ecosystems.
The true test of a digital economy lies in who it includes — and who it leaves behind.
Palash Baruah is fellow at National Council of Applied Economic Research (NCAER), New Delhi and D L Wankhar is a retired Government of India officer
