Prime Minister Narendra Modi may offer another gift to India’s electronic cash companies. An index of the stocks has gained 12% since November’s surprise currency ban, and may further rally after the government introduced tax rebates on digital transactions from Christmas Day.

The gain in the gauge of 23 companies that make the devices and offer cashless services compares with the S&P BSE Sensex’s 3% drop since 8 November, when Modi invalidated 86% of the nation’s currency in circulation. Modi rolled out a slew of measures including rewards, tax rebates and discounts for digital transactions on 25 December.

E-commerce software makers Vedavaag Systems Ltd and Intense Technologies Ltd have rallied more than 50% in the past month, while Aurionpro Solutions Ltd, R. S. Software India Ltd and Tanla Solutions Ltd. have gained 20%.

Digital payments have jumped almost 43% to 958 million transactions in December from November, according to the central bank’s latest data. As many as 41% of small and medium companies said their clients have shifted to bank checks or electronic payments since demonetization, according to a survey of more than 1,100 firms from the local unit of Standard & Poor’s.

India’s digital economy will grow to $1 trillion over the next 3 to 4 years, information technology minister Ravi Shankar Prasad said Wednesday.

“We expect double-digit revenues growth for e-governance firms over the next 3 to 4 years if the government systematically encourages cashless transactions," A.K. Prabhakar, head of research at IDBI Capital in Mumbai, said by phone. “Growth in digital modes of payments will continue to be strong if the safety is increased and charges are reduced."

Credit Suisse Singapore Ltd bought 3.83 million shares in Vakrangee Ltd on 10 November. The company, which provides digital financial services to the government and lenders, counts Janus Capital Management LLCamong its shareholders, data compiled by Bloomberg show. Bloomberg

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