Why would they interpret a system being used for the purpose it was designed for as terrorism? Using it for small purchases is one of the intended use cases, e.g. allowing street vendors to accept digital payments, incentivising them to have a bank account and reducing the risk of theft.
This is implied in an authoritarian country like India.
However, the Government is in a fix. Almost the complete stack is subsidized by the Government. This led to an explosive adoption growth for merchants as there is no MDR and payers for ease of transaction as they don't need to carry hard currency anymore. This has enabled the Government gaining complete insights into spending and earning patterns. Withdrawing this massive subsidy will again lead to people using cash. So in order to prevent "terrorism" they will subsidize for the foreseeable future.