6 years after demonetisation, 76% prefer cash transaction, finds survey. Read here

The Narendra Modi led government at the centre had conducted the process of demonetisation in six years ago in order to curb the circulation of black money. The gargantuan step to check the growth of the parallel economy, might have faltered in the long run, as several surveys reveals that despite the Centre effort to make a ‘cash-less’ economy, currency in people's hands have only increased in the past six years. 

Digital transactions continue to rise in the economy and yet there is a 44% rise in cash transaction, especially in real estate deals, a survey has revealed. The survey has further revealed that 76% people use cash to buy groceries, eat out and get food delivery. Other common areas of cash usage include home repairs, beauty services.

Survey tools

LocalCircles conducted its 6th year survey since demonetization to better understand use of cash. The survey received over 32,000 responses from citizens located in 342 districts of India. 68% respondents were men while 32% respondents were women. 44% respondents were from tier 1, 34% from tier 2 and 22% respondents were from tier 3, 4 and rural districts. 

Survey findings

According to the survey conducted by LocalCircles, property transactions emerged as the top area of cash usage from a value per transaction standpoint in the 2021 survey. 44% of those surveyed who bought a property in the last 7 years said cash was part of the transaction. 

Notably, the situation may look to have improved compared to the LocalCircles survey in November 2021 when 70% of the respondents had admitted to paying cash as part of the transaction for property acquired in the previous 7 years. As against 16% who admitted to having paid over half of the amount in cash in 2021, the new survey reveals that the percentage of such cases has dropped to 8% in the new survey.

Further, one of the other areas where cash use was reported to be high by people in the 2021 survey was for home repairs, salaries of household staff, beauty services. 76% households surveyed also stated that they used cash for groceries, eating out and food delivery transactions in the last 12 months

This survey reveals that many are still to shift or adopt digital payment systems, maybe because it is more convenient to pay cash for purchase of fruits, vegetables or a few items of grocery from a store, or due to other reasons including voucher payment.

National Payments Corporation of India (NPCI) Managing Director and Chief Executive Officer Dilip Asbe at an official event in July stated that the overall universe of people using services like the Unified Payments Interface (UPI) is still 250 million or about a fifth of the population.