The futility of demonetisation: Cash is back, and with a vengeance

In November 2016, when demonetisation of Rs 500 and Rs 1,000 were done, one of the main arguments put forward was that the move will provide a big push towards cashless India. In less than 15 months, that argument seems rather weak. According to data from the Reserve Bank of India (RBI), on March 9, the currency in circulation stood at Rs 18.13 trillion – higher than Rs 17.97 trillion on November 8 – the day demonetisation was announced. The demonetisation drive sucked Rs 14.48 trillion out of the system.   

On the other hand, spends through debit and credit cards at point-of-sale after rising to Rs 530 billion in October 2017, has slipped from Rs 465 billion in February, the weekly representative data from the RBI shows. Perhaps, as the year-end approaches people have decided not to swipe cards casually. 

However, payments through the United Payment Interface or UPI has been steadily growing, and at Rs 191 billion, it is slightly less than 50 per cent of expenses through credit and debit cards. Clearly, cash hasn’t been a casualty in the demonetisation drive. Instead, people are using both cash and digital platforms aggressively. 


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