Digital payments, policy transmission, and growth: contemporary dimensions of monetary policy in india (2020–2025)

This study examines how evolving monetary policy mechanisms and the proliferating use of digital payments have affected economic outcomes in India from 2020 to 2025. While the central bank’s traditional instruments repo rate, reverse repo rate, liquidity management—remain pivotal, digital innovation has emerged as a major catalyst for refining monetary policy transmission. By analysing GDP growth, lending rates, inflation behaviour, and payment system modernization, the paper uncovers links between policy stance and economic momentum. Panel regression and ARDL methodologies reveal that integration of digital payments leads to improved transmission efficiency, lower lending rates, and enhanced macroeconomic stability. The findings suggest that policy makers should leverage digital financial infrastructure for more responsive and inclusive monetary policy, ensuring resilience in the face of domestic shocks and global volatility.