Five year after deꦑmonetisation, the central governmen♊t’s ostensible aim to wipe out black money and switch over to digital transactions seems to have met with limited success, a national online survey by LocalCircles has revealed. While cash usage has declined, it still dominates in transactions like purchase of property, where earlier too black money dominated.
The survey report, based on response♏s from 36,000 participants across more than 388 distr▨icts, including big and small cities, revealed:
* 70% of those who bought a property in the last 7 years had to p♍ay a part of the payment in cash of which 16% paid over half of the amount in cash.
* 95% 𓃲admitted to using cash to pay for groceries, eating out and food delivery; 13% used it for buying gadgets; 12% have used i🎐t in buying valuables like property, vehicles or jewelry.
* Three fourth respondents admitted to paying in cash for services like h🧸ouse-help, home repairs or▨ beauty/haircut, etc.
* On the positive side, two third respondents were foun🧜d to have reduced their cash transactions to less than 25% of their total spend. The change has been more in the last one year.
The government announcement of demonetisation on November 🐽8, 2016, had taken even most policy makers by surprise. The lack of preparedness as people rushed to exchange the demonetised Rs 500 and Rs. 1000 currencies created chaos across the country for several weeks as not just people but also businesses faced cash crunch.
Five years later, the impact of demonetisation on the economy still lingers while experts argue that black money is backဣ in circulation. This was most noticeable during the two waves of Covid as people rushed to get scarce life-saving drugs and oxygen for their dear ones. Income tax raids in recent months have also uncovered fraudulent transactions and unaccounted incomes from many businesses.
According to Reserve Bank of India (RBI) data, currency with public for the fortnight ended October 8, 2021, stood at a record high of Rs. 28.30 lakh crore, up 57.48% or Rs. 10.33 lakh crore, from a level of Rs. 17.97 lakh crore on November 4, 2016. Cash with the public has shot up 211% from Rs 9.11 lakh crore, recorded on November 25, 2016. It rose by 8.5%, or Rs 2.21 lakh crore, on a year-on-year basis. The jump was p🍨rimarily driven by a rush for cash by the public in 2020 as the government announced a stringent lockdown to tackle the spread of the Covid pandemic.
The RBI’s annual report for 2019-💎20 revealed that many economies saw a rise in cash in circulation as citizens started hoarding cas🤪h during the pandemic. However, currency circulation in India was particularly sharp, with circulation rising to Rs. 26.9 lakh crore since 2020, as per RBI reports.
LocalCircles’ report c🌺ontends that cash is still widely used in buying and selling properties, mainly to evade taxes paid to the government, via commission agents, middlemen or brokers. This applies to many MSMEs too.
Under the Goods and Service Tax Law and Income Tax Act, 🥀1961, it is mandatory to generate and provide receipts to customers for the purpose of audit or assessments. The survey revealed that 56% of citizens made “5-25%” of their monthl☂y purchases without a receipt. In 15% cases the volume of purchases without receipt was “25-50”, and a similar percentage of respondents admitted to making “50-100%” purchases without receipt. Only 11% of citizens admitted to insisting on receipt for all transactions.
