The fact that the digital payment infrastructure is quickly being spread throughout rural India is a paradigm shift to tackle two of the most urgent Sustainable Development Goals SDG 1 (No Poverty) and SDG 8 (Decent Work and Economic Growth). The proposed research paper explores the multidimensional channels in which digital payment adoption (DPA) has an effect on poverty reduction and economic development in 28 Indian states between 2016 and 2023. Based on a new composite Digital Payment Adoption Index based on NPCI, RBI, and TRAI data, and panel data analysis, structural equation modelling (SEM) and mediation analysis, the study results indicate that a unit standard-deviation increase in the DPA Index is linked to a decrease in rural poverty headcount ratio by 3.84 percentage points and an increase in state-level GDP per capita growth by 1.62 percentage points. The key mediating mechanisms are found to be financial inclusion and lower transaction costs. These effects are moderated by the gender digital divide. The way policies can have impacts is demonstrated in the context of the UPI ecosystem, Pradhan Mantri Jan Dhan Yojana (PMJDY) and the Direct Benefit Transfer (DBT) system. The results can be added to the new body of research on fintech-enabled development and offer practical suggestions to policy makers interested in utilizing digital payments as a tool of inclusive growth.