Four years after demonetisation, cash is majorly still used for low-value transactions such as buying groceries and making payments to domestic staff. According to a latest survey conducted by community social network LocalCircles, the top categories of purchases for which citizens paid the most amount in cash without a receipt were grocery (for 39 per cent respondents), and salaries for domestic staff (for 31 per cent out of the 15,376 respondents) in the last 12 months. Even though these categories of payments are considered to be of low-value, Income Tax laws in India have prescribed that payments in cash cannot be made to an individual beyond a daily limit of Rs 10,000. (Also Read: WhatsApp Pay Starts In India. How It Can Shake Up Payments Market )
Similarly, laws have prescribed different restrictions on payments in cash without receipt which applies to businesses as well as individuals. Four years ago, on this day (November 8, 2016), Prime Minister Narendra Modi had demonetised Rs 500 and Rs 1000 notes, to curb the black money problem that has been among the primary reasons for the government to lose tax revenue. The move was aimed at fighting black money, creating a cashless economy, and eliminating fake notes. While demonetization was supported by many, implementation issues of the system plagued the common man which caused a huge inconvenience to deposit and withdraw money.
The GST system coupled with demonetization helped in boosting digital payments in India, it was actually the COVID-19 pandemic that gave a leg up to the digital payment ecosystem across the country. Due to safety concerns of using currency notes and coins, customers made greater use of electronic payment methods.
According to data by the Reserve Bank of India (RBI) in October 2020, India witnessed a massive rise in volumes of digital payments to 3,434.56 crore in 2019-20. In five years, i.e., between 2015-16 and 2019-20, digital payments saw an annual growth rate of 55.1 per cent in terms of transaction volumes and 15.2 per cent in terms of value. Only in October this year, the UPI-based payments reached a new milestone with 207 crore transactions.
According to RBI, digital payments made through RTGS, credit transfers such as NEFT, UPI, AePS, IMPS, etc, card payments, debit transfer and direct debits, and prepaid payment instruments grew 135.4 per cent from 1,459.02 crore in 2017-18 to 3,434.55 crore in 2019-20.
The survey also stated that most citizens sought the mandatory disclosure of assets of public officials and their families and linkage of Aadhaar to property owned as a way to further solve the black money problem in India. While 33 per cent of 15,492 voters believed linking property ownerships with Aadhaar is a must, 38 per cent asked for asset disclosures belonging to public officials, families.