How spending habits changed in the 5 years since demonetisation

While cash usage has subsided in the five years since demonetisation, it is still prevalent for certain services and transactions. Cash continues to be used for big ticket transactions such as property purchases as well as small ticket transactions such as grocery purchase, eating out and food delivery, shows a survey by LocalCircles.

The report stated that 70 per cent of those who bought a property in the last 7 years had to pay a component in cash, while 16 per cent paid over half of the amount in cash. As much as 16 per cent stated that they had to pay over 50 per cent of price in cash when buying land, house, flat, shop, office or some other property, while another 16 per cent said ‘30-50 per cent’, 32 per cent said ‘10-30 per cent’ and 6 per cent said ‘0-10 per cent’.

Only 30 per cent of respondents said that none of their property transactions were done in cash. There were 8,920 respondents to this question.

While cash is still widely and frequently used, there has also been a gradual decline of its usage. When asked what percentage of their monthly purchases were without receipt in the last 12 months, 56 per cent said ‘5-25 per cent’, while 15 per cent said ‘25-50 per cent’ and another 15 per cent said ‘50-100 per cent’. Only 11 per cent said ‘none’, while 3 per cent couldn’t say. This indicates that for two in three Indians, cash transactions now amount to less than 25 per cent of their total transactions.

The survey stated that approximately 20 per cent Indians reduced cash transactions in the last 12 months. Similar survey results of 2019 and 2020 showed that 27 per cent and 14 per cent respectively say that ‘50-100 per cent’ of their monthly purchases on an average without a receipt. It stands at 15 per cent currently.

Of those who used cash for purchases in the last 12 months, 95 per cent stated that they used it to pay for groceries, eating out and food delivery. The survey sought to understand which categories of products people spent a sizeable portion of cash in the last 12 months. As many as 7 per cent said they used cash to buy groceries, eat out and food delivery, gadgets, valuables like jewellery, vehicles and property, while 6 per cent said they used cash to buy groceries and gadgets, and 3 per cent said groceries and valuables. The majority -- 79 per cent said they used cash for groceries, eating out and food delivery, while 3 per cent used it for other purchases and 1 per cent couldn’t say.

When it comes to services, 20 per cent said they used cash for salaries of domestic staff, 19 per cent said personal services or home repairs, and 1 per cent said travel. Around 2 per cent said they used cash for domestic staff salaries and travel, 2 per cent said travel and personal services, 36 per cent said salaries and repairs, 16 per cent all of the above.

The LocalCircles survey received over 36,000 responses from more than 388 districts in India. Out of this, 44 per cent respondents were from Tier 1, 33 per cent from Tier 2, and 23 per cent from Tier 3, 4 and rural districts.

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