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Five years after demonetisation, cash transactions are down but not gone, survey says

According to the LocalCircles survey, over the last year, 20% of respondents reduced their cash transactions in favour of digital payments. 

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New Delhi: Five years after demonetisation, cash still has a major role to play in various transactions even though cash use has declined over the years, a survey by LocalCircles, a community platform, has found.

The survey included responses from 36,000 people across 388 districts registered with the LocalCircles platform, of whom, 44 per cent were from Tier 1 districts, 33 per cent from Tier 2 districts, and 23 per cent from Tier 3 and 4 and rural districts.

According to the survey, for every two out of three participants, cash transactions accounted for less than 25 per cent of their total transactions, and that over the last year, 20 per cent reduced their cash transactions in favour of digital payments.

However, cash is still very much part of various transactions — 70 per cent of 8,920 respondents who bought a property in the last seven years said they had to pay a component of the prices in cash, 16 per cent of whom paid over half of the amount in cash.

“Citizens on LocalCircles report that cash is still widely used in buying and selling of property mainly to evade taxes paid to the Government via commission agents, middlemen or brokers,” says the survey.

Out of 9,180 respondents who said they used cash for payments, “95 per cent in the last 12 months used cash for buying groceries, eating out and food delivery, 13 per cent used it to buying gadgets such as smartphones and laptops and 11 per cent used it for valuables like property, jewellery and used vehicles,” says the survey.

Also read: More businesspeople died of suicide than farmers in 2020, shows NCRB data

‘Rise in digital payments’

In 2019, 27 respondents said 50-100 per cent of their monthly purchases on an average were without a receipt. This number fell to 14 per cent in 2020, and is now at 15 per cent, according to the survey.

“This shows that there has been approximately a 20 per cent reduction in the number of citizens who did the majority of their monthly purchases without receipt in the last 12 months,” it says.

“If the Central Government and State Government put in a comprehensive effort to drastically reduce black money in property transactions and the GST Council considers lowering GST rates on services, India can likely continue the current momentum of migration from cash to digital transactions in the next 5 years,” says the survey.

(Edited by Paramita Ghosh)

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