Digital Payment Network Architectures and Economic Growth: A Cointegration Study of India’s Payment Infrastructure

India has shown exponential growth particularly from 2013 till date in terms of Gross Domestic Production (GDP). With a mean GDP growth rate of 4% to 6%, India is poised to become world’s third largest economy. During the same period, the digital payment infrastructure of India has positioned it as an emerging nation in terms of digital payments. In this paper, we have attempted to explore whether the growth in economy and digital payments is coincidental or they have any significant, stable long-run relationship. For this purpose, we have employed Engle-Granger cointegration test using popular Indian digital payment channels like National Electronic Fund Transfer (NEFT), Real Time Gross Settlement (RTGS), National Automatic Clearing House (NACH), PoS transactions through cards and Immediate Mobile Payment Services (IMPS) with GDP as the dependent variable. A cointegrating relationship is a state of statistical equilibrium when ≥ 2 non-stationary time series variables that tend to fluctuate in short run, stay together in the long run. Such relationships suggest presence of specific stationary linear combination of these variables. This uncovers the fact that variables under study are not coincidently correlated but they share a trend in common. The present study is based on exploring cointegration relationship between select digital payment systems on Indian economy. The study concluded that out of the select channels of digital payments only RTGS has long run relationship with Indian Economy.