India’s demonetization effort, which was implemented six years ago, attempted to destroy vast amounts of undeclared cash riches by requiring Indians to exchange their old notes for new ones. Instead, it destroyed the economy, made millions of Indians miserable, and fell short of its main goal.

Indians still possess huge amounts of unreported, untaxed wealth. The quantity of cash payments made as part of real estate transactions serves as one indicator of this. A poll by the neighborhood-driven social media site LocalCircles found that 44% of respondents who had purchased real estate in the previous seven years had paid in part with cash.

35% of respondents to the survey, which interviewed 32,000 people in 342 districts throughout India, said they did not want to divulge how they paid for their purchases.

According to LocalCircles in the study paper, “Unfortunately, property transactions is one area where there have been absolutely zero changes, therefore bribery is also common.” Since property owners seek to avoid paying the entire amount of taxes associated with the sale, the original transaction of the land or property is still largely made in cash.

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India’s money supply is at an all-time high.

During the COVID-19 pandemic, digital payment volume increased in India, yet a sizable portion of the population still preferred to transact in cash.

According to information from the Reserve Bank of India, circulating cash in public hands reached a new high of 30.88 lakh crore rupees (pdf) ($377.9 billion) in the fortnight that ended on October 21. (RBI). This amount is 72% greater than the Rs 17.97 lakh crore that was registered on November 4, 2016, a few days before the announcement of demonetization.

People’s desire for money in 2020, when the government implemented a strict lockdown to stop the spread of the COVID-19, is the main factor driving the increase. Particularly in smaller towns and rural areas where customers were still wary of making online purchases in the early weeks of the outbreak, people had started saving money to pay for necessities like groceries.

According to the report, one “personal” explanation for the craving for cash is the immediate satisfaction provided by cash. However, there are still numerous portions of the public who have trouble accepting and allowing digital payments, which is another factor.

However, this does not always imply that digital payments are losing ground.

An RBI paper on digital payments in 2019 stated, “Although digital payments have been gradually increasing in recent years, both in value and volume terms across countries, data also suggests that during this time, currency in circulation to GDP ratio has also increased in consonance with the overall economic growth.”

The RBI continued, “Over time, an increase in digital payments to GDP ratio does not seem to inherently imply a reduction in the currency to GDP ratio of the country.