Reliance Jio gave everyone free internet. Hundreds of millions of Indians came online. More people started using UPI due to it being easy, no lock-ins, and digital. Then demonitisation happened in a week. The rest is history.
The single biggest contributor to the rise of UPI was demonetization and the significant push from companies & banks by offering discounts and removing transaction charges until recently.
In India, there are many marginal businesses which are not registered as a business. I expect a lot of P2P payments to be Peer to unregistered business.
Demonetization 2016
There was very little effect of Demonetization on UPI adoption, Growth rate of UPI was already very good before demonetization , Very little effect of Demonetization on it's adoption, Covid-19 actually gave more boost to UPI adoption of late. Don't any believe lies propagated by ruling parties.