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Cash Circulation Doubles to Rs 33 Lakh Crore 7 Years After Demonetisation: Survey

Despite the Modi government's digitisation push, 76% of property buyers paid a component in cash and 26% of Indians still use cash for most household purchases.
76% of property buyers paid a component in cash and 26% of Indians still use cash for most household purchases.

Representational Image. Image Courtesy: PTI

The demonetisation of Rs 500 and Rs 1,000 notes was announced on November 7, 2016, to curb the use of black money. Soon, Unified Payments Interface (UPI) and other digital payment mechanisms were introduced to reduce cash transactions.

However, cash in circulation has nearly doubled after seven years from Rs 17 lakh crore in November 2016 to Rs 33 lakh crore in October 2023, a survey conducted by LocalCircles shows.

According to the survey, 44,000 responses from citizens in 363 districts shows that despite UPI accounting for more than 78% of total retail digital payments in May, 76% of property buyers had to pay a component of the price in cash in the last seven years.

“Cash is still being used heavily in big-ticket transactions, especially property transactions,” the survey stated.

In fact, the cash component in property transactions is again increasing as only 24% of property buyers indicated that they didn’t have to pay cash as against 30% two years ago.

Despite UPI crossing 1,140 crore transactions, a new record with the value surpassing Rs 17.6 lakh crore, out of 10,861 people, 15% said that 50% of the transactions had to be paid in cash, 18% said that the cash component was 30%-50% and 15% said that it was 0-10%.

The survey also shows that except for high-value products like a vehicle or a gadget, most consumers still use cash in buying groceries, eating out, food delivery, paying household help, home repairs and personal services.

According to the survey, 26% of Indians surveyed still use cash for most of their household purchases and without a receipt. Out of 11,189 citizens, only 15% don’t do cash transactions.

Seven per cent of the respondents bought long-term assets or valuable items like property, jewellery, used vehicles, etc. with cash in the last 12 months. Only four per cent used cash in the last 12 months to buy smartphones and laptops.

“The community feedback indicates that for groceries, eating out, household help payments, convenience is the driver while for services taxable at 18% GST rates, it is the taxation that is driving vendors and consumers to transact in cash.”

Compared to the 2021 survey, the percentage of consumers not purchasing things in cash has marginally increased from 11 to 15.

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