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INTERNATIONAL JOURNAL OF ADVANCED RESEARCH IN COMMERCE, MANAGEMENT & SOCIAL SCIENCE (IJARCMSS) [ Vol. 9 | No. 2 (III) | April - June, 2026 ]

Digital Public Infrastructure and the Expansion of Digital Payments in India: Evidence from an ARDL Bounds Testing Approach

Yedu T Dharan & Amruthambika P.

India's Unified Payments Interface (UPI), launched in August 2016, represents one of the most remarkable digital payment transformations in any emerging economy. This study examines the structural determinants of UPI-based payment expansion using 113 monthly observations (August 2016–December 2025) and the ARDL bounds testing approach of Pesaran, Shin, and Smith (2001). Two separate model specifications are estimated: Model 1(M1) uses TRAI monthly broadband subscriber data as the primary connectivity variable (k = 8; F = 7.84); Model 2(M2) uses interpolated internet penetration as a robustness check (k = 8; F = 7.61). Both substantially exceed the 1% upper bound of 4.43, confirming cointegration. TRAI broadband carries a long-run elasticity of 0.58; mobile banking yields 0.53. The demonetisation step dummy implies a permanent structural increase of approximately 125% in UPI values, applying the correct semi-log formula (). The ECT coefficient of −0.61 confirms rapid equilibrium restoration. VIF analysis confirms the absence of severe multicollinearity (max VIF = 3.84). Pairwise Granger causality tests reveal that TRAI broadband exerts a unidirectional influence on UPI (broadband → UPI; p = 0.027; reverse direction fails to reject at p = 0.274), supporting its identification as a structural determinant. NEFT and mobile banking exhibit bidirectionality; their long-run estimates are interpreted as associations withina cointegrating relationship. DOLS and FMOLS robustness checks confirm elasticity consistency.

Dharan, Y. & Amruthambika, P. (2026). Digital Public Infrastructure and the Expansion of Digital Payments in India: Evidence from an ARDL Bounds Testing Approach. International Journal of Advanced Research in Commerce, Management & Social Science, 09(02(III)), 152–160. https://doi.org/10.62823/IJARCMSS/9.2(III).8986
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DOI:

Article DOI: 10.62823/IJARCMSS/9.2(III).8986

DOI URL: https://doi.org/10.62823/IJARCMSS/9.2(III).8986

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