Six years after demonetisation: e-transactions gain, but cash is still king

The Covid-19 pandemic has boosted digital transactions, with UPI turning out to be the biggest gainer, however, the dependence on cash has not reduced

On November 8, 2016, Prime Minister Narendra Modi announced that Rs 500 and Rs 1,000 denomination bank notes in circulation will no longer be a legal tender. A Rs 2,000 denomination bank note was issued, which was followed by a new note of Rs 500. While the primary objective of the demonetisation exercise was to weed out black money, one unintended consequence was digital payments gaining pace.
 

The Covid-19 pandemic, which saw nationwide lockdowns in 2020, further boosted digital transactions, with UPI turning to be the biggest gainer. The dependence on cash, however, has not reduced. Currency with public,which was Rs 17 trillion just before the demonetisation exercise, increased to almost Rs 31 trillion, the latest data showed. Cash-to-GDP ratio, however, remained range-bound over the years.