India, Aug. 30 -- A friend recently shared a story that captures India's payments paradox better than any statistic. His household help handed him Rs.500 in cash and asked that it be sent by UPI to his family in another state. He didn't know how to do it himself. But he knew UPI would deliver the money instantly, without fees. This small moment shows how India really works today: cash in hand, digital in transit. One rail begins the journey, the other completes it. Which is why a viral tweet last week, struck a strong note. It argued, "Every rupee increase in UPI transactions reduces debit card usage by 14 paisa." The thread cited a State Bank of India (SBI) research report to triumphantly declare that UPI had overtaken cash in India. The claim seemed plausible. UPI has become a marvel of the payments' world. In July, it processed 19.4 billion transactions worth more than $300 billion-unmatched by any other digital payment rail. To the outside world, India looks like it has leapfrogged the credit-card era and gone straight to the QR code. But the SBI report never said cash was finished. Quite the opposite. It found that UPI and ATM withdrawals together now account for how 91% of Indians access and use money. On the Reserve Bank of India's books, currency in circulation has doubled since 2016, touching about $450 billion. In other words, the rocket has indeed taken off. But the gravitational force is just as strong. Why does cash persist so strongly in a country celebrated for its digital rails? Between one of India's veteran bankers and a public policy analyst who worked on Project Aadhaar, they used three forces to explain this. Politics is the most visible driver as India's elections are among the costliest in the world. Estimates say that during the 2024 elections, the cost of each vote may have reached an astonishing Rs.1,400. A significant share of that money moves in bundles of notes, outside the formal system. State contests show the same pattern. Take Karnataka, one of India's richest states as a case in point. The banker said the cost of contesting a single seat is whispered to have climbed from about $120,000 a decade ago to more than $1million today. Once raised, this cash does not disappear. It finds its way into sectors capable of absorbing large sums without drawing attention. In a large city, for instance, its construction boom may have thrived because authorities looked the other way while black money was channelled into property deals. If every transaction had been taxed and declared, housing would have gotten unaffordable. But the cash that went into real estate did not circulate forever. It had to be stored somewhere. In some of these cities, those with the means allegedly built secure "strong rooms." That arrangement however is perilous. There is no regulatory oversight, no paper trail, no contract. If the keeper of the strong room chooses to deny knowledge of the money or refused to open the vault, the depositor would be left with nothing. From the RBI's perspective, the money had been printed and is technically in circulation. But in practice, it had vanished into private vaults - untraceable, unproductive, and dangerous even to those who owned it. Cash was not only costly to the state. It was a hazard for the very people who trusted it most. Memory is the second driver. Demonetisation left scars that have not faded. People saw overnight how vulnerable their savings could be. That fear lingers. It explains why many households cling to cash as a store of value. This, even as they embrace UPI for speed and reach. The two now coexist in wallets and on phones, hedges against each other in an uncertain world. The cultural habits run even deeper: weddings and festivals still call for crisp envelopes of cash, slipped quietly across the table. QR codes may have conquered the kirana shop, but not the rituals that mark Indian life. The third force is cost. On paper, cash looks abundant. But the cost of printing, transporting, and securing currency are logistical burdens that fall on taxpayers. This turns the debate about UPI's sustainability on its head. Put all this together and a clearer picture emerges. UPI has not displaced cash. It has displaced cards, cheques, and bank transfers. Could India ever do without cash? Not entirely. Cash has qualities no digital system can replicate. It works when networks fail. It protects anonymity. It is instantly trusted across geographies and generations. That is why demonetisation could not kill it. That is why election finance reforms have barely dented it. And that is why the tweet that went viral last week was wrong....