Cash still reigns

14 NOV,2022 | MEDC


This week marked six years of India's demonetization exercise. While the primary intent of the exercise was weeding out the black money from the system, an unintended consequence was a huge rise in the digital payments space. The Covid pandemic, which saw a series of nationwide lockdowns in 2020, further boosted digital transactions in the Indian economy. However, available data shows that the dependence on cash has not reduced. Currency with the public, which was Rs. 17 trillion just before demonetization, rose to almost Rs. 31 trillion, as per the latest data. It is still hard to say whether demonetization has truly succeeded in its objectives. In any case, the aim was not to achieve a cashless society, but a less-cash society. India’s banking and financial system continues to face an intimidating set of challenges, but the lessons of the demonetization exercise will stand our policymakers in good stead.

*Picture credit: Google

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