India's demonetization experiment was a bust, finds Global Cash Index™

Jun 14, 2018


'The results are in. The Indian government's grand demonetization experiment has proven to be a bust, with cash continuing to thrive in the nation's economy,' explains the latest Global Cash Index™.

This PYMNTS report, a collaboration with Cardtronics, looks at the use of cash in India. Notably, cash continues to thrive in the sub-continent, even a year and a half after Prime Minister Modi's brutal cash ban. This may have sped up the process for digitization by a few years but was that worth the price paid by the most vulnerable?

Excerpt from Global Cash Index - India Edition (Aug 2018)

Demonetization was launched in India in an effort to crack down on the nation’s underground economy, boost tax revenues and encourage the transition to a digital banking infrastructure. However, nearly two years after the policy launched in 2016, cash remains a key component of the nation’s economy...Based on current trends, the rate of total cash usage in India is expected to rise at a compound annual growth rate (CAGR) of 10.47 percent from 2016 to 2021.

'Several factors are working to keep cash in play, including India’s large rural population — which falls outside digital banking infrastructure’s reach — a thriving underground economy, low education levels and a general distrust of the banking system.'
"Introduction (p.3)Global Cash Index - India EditionPYMNTS (Aug 2018)

Here are some notable findings from the latest Index:

  • India has just six point-of-sale (POS) terminals per 100,000 people, far below the rate of other Asia-Pacific neighbors.
  • India’s cash usage was 49.3 percent in 2016 and is expected to drop slightly to 46.2 percent by 2021.
  • India spent $1.5 trillion in cash in 2016, far more than any other nation in the region.
  • India has four bank branches per 100,000 people, a rate lower than Australia and South Korea, but more than Singapore.
“[Fearing] the absence of cash, people had no choice but to go to electronic payments.”
"Ritesh Pai CDO at YES BANKGlobal Cash Index - India EditionPYMNTS (Aug 2018)

About The Index

The Global Cash Index™, a Cardtronics collaboration, focuses on the use of cash for making payments, and as a payment method that equally plays a role with cards, checks, direct debit and other methods of settling up between consumers and businesses. Unlike most reported estimates of cash, this proprietary data analysis focuses on the use of cash for making payments rather than hoarding.

Download the Global Cash Index here

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Last Updated: Jan 12, 2024