5 years post demonetization while the use of digital transactions in India has rapidly accelerated due to COVID-19 pandemic, a survey found that the use of cash is still prevalent in property transactions, grocery buying and paying for services. On November 8, 2016, Prime Minister Narendra Modi had announced his government’s demonetisation move when Rs 1,000 and Rs 500 notes were scrapped in a sudden announcement.
70% of citizens surveyed said that when they or their family bought a property in the last 7 years had to pay a component of the prices in cash while 16% paid over half of the amount in cash. Of those who have used cash for purchases of products in last 12 months, 95% have used to pay for groceries, eating out and food delivery.
Similarly, of those who have used cash for purchases of services during the period, 3 in 4 have used it for paying for services like house-help, home repairs or beauty/haircut, etc.
The survey, by community social media platform LocalCircles, received over 36,000 responses from more than 388 districts of India. Of which, 44% respondents were from tier 1, 33% from tier 2, and 23% from tier 3, 4 and rural districts.
It further found that for 2 in 3 Indians, cash transactions are now less than 25% of their total transactions. Also, if data points from previous years are compared, it is evident that just in the last 12 months approximately 20% of Indians have reduced their cash transactions.
Citizens on LocalCircles continues to report that cash is still widely used in buying and selling properties. People have also highlighted that even for many MSMEs, real-estate sales and purchase, sale and purchase of agricultural land, transactions continue to take place with property registration taking place at a fraction of the value paid thereby evading taxes.
On an aggregate basis, 70% of those who bought a property in the last 7 years had to pay a component of the prices in cash, while 16% paid over half of the amount in cash. This question in the survey received 8,920 responses.
The question in the survey asked citizens about the percentage of their monthly purchases on average without a receipt in the last 12 months. In response, 56% of citizens said that “5-25%” of their monthly purchases were without a receipt. 15% said it was “25-50%”, and another 15% said it was “50-100%”.
Only 11% of citizens said “none”, while 3% couldn’t say. This means that on an aggregate basis, for 2 in 3 Indians, cash transactions now less than 25% of their total transactions. This question in the survey received 9,082 responses.
After comparing the finding with similar survey results of 2019 and 2020 surveys, 27% of citizens in 2019 and 14% in 2020 reported saying, “50-100%” of their monthly purchases on an average were without a receipt, and is currently at 15% this year.
This shows that there has been approximately 20% reduction in the number of citizens who did the majority of their monthly purchases without receipt in the last 12 months.
This question in the survey also tried to understand for which categories of products did citizens spend or paid a sizeable portion in cash in the last 12 months.
On an aggregate basis, of those who have used cash for purchases in the last 12 months, 95% have it used to pay for groceries, eating out and food delivery. This question in the survey received 9,180 responses.
If reasons given by citizens are evaluated in the order of priority, the findings indicate that 95% in the last 12 months have used cash for buying “groceries, eating out & food delivery”, 13% has used it in “buying gadgets such as smartphone, laptop, etc”, and 11% used it for “valuables like property jewellery, used vehicle”.
Similarly, the following question tried to understand for which categories of services have citizens paid in cash in the last 12 months. In response, 20% said “salaries of domestic staff”, 1% said “travel”, and 19% said “personal services or home repairs, etc”.
On an aggregate basis, the survey found that 3 in 4 have used it for paying for services like house-help, home repairs or beauty or haircut, etc. This question in the survey received 8,927 responses.