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Five years after demonetisation, many sectors still prefer cash transactions

09:25 AM Nov 08, 2021 | Sanjay Jog

Five years after the demonetisation, although cash usage has declined, many sectors still prefer cash transactions. LocalCircles, a leading community social media platform, found that although the number of people using cash has decreased, a section of people still prefer cash. According to a survey conducted by the platform, cash is still widely prevalent in India when buying a property.

Out of the 8,920 responses, close to 70% of people had paid a component of property price in cash in the last seven years. From the number, 16% of people paid over half of the amount in cash. Further, 95% of people have used cash to pay for groceries, eating out and food delivery; 13% used it for buying gadgets; 12% have used it in buying valuables like property, vehicles or jewellery.

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Out of 8,927 responses, who have used cash to pay for services in the last 12 months, 3 in 4 people have used it for paying for services like house-help, home repairs or beauty/haircuts. When it came to Indians, 2 out of 3 people preferred using cash for the above services. Further, cash transactions now have less than 25% of their total transactions.

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In just the last 12 months, 20% of Indians reduced their cash transactions. LocalCircles has quoted RBI data which clearly shows that despite the Government's efforts to digitise the economy, the cash in the economy is still the king and has shot up to 14.7% of GDP in 2020-21. The survey received over 36,000 responses from more than 388 districts of India.

Of which, 44% of respondents were from tier 1, 33% from tier 2, and 23% from tier 3, 4 and rural districts. The LocalCircles, in its survey, observed that if the Central Government and State Government put in a significant comprehensive effort to reduce black money in property transactions drastically.

The GST Council considers lowering GST rates on services; India can likely continue migration from cash to digital transactions in the next five years

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