Despite Digital Revolution, Cash Driven India Is Here To Stay

We are in the middle of a digital revolution, a digital transformation, and digital innovation. With everything going online, it is expected that physical cash will cease to exist. However, India paints a different picture

In India, digital payments are on the rise. With the internet infrastructure and connectivity reaching more than 700 million people across the country, using digital mode for monetary transactions has definitely seen an upward trend. Does that mean India is going to become a cashless economy soon? The answer to this question is No.

We often read that India is turning into a cashless economy. That soon, in a span of a few years almost everything will be digitized and physical cash flow will become a bare minimum. However, the actual picture is quite different from the projected picture. India has shown a decline in cash flow whenever a drastic event came her way but did she bounce back to cash as her preferred mode of transacting? Yes, she did. Not once, twice, but every time.

No matter how much cash flow falls owing to contingent circumstances, cash always bounces back. Let’s look at a few significant events that came as a strong challenge for the cash flow in India, and India’s cash flow response to it.


If we talk about challenges that the cash flow in India faced and don’t talk about demonetization, we are doing it all wrong. So, this is where I am going to begin. While some of us were planning to take a trip somewhere as the onset of winter had knocked our doors in November 2016, One fine morning came the announcement. The announcement that the major chunk of cash we had in hand was no more valid. Demonetization was a move to curb black money transactions, terrorism funding and an aim towards a lesser cash dependant India.

It did its trick for a while, If we look at the data provided by CRISIL, the currency in circulation came down to about Rs.12.6 post demonetization. However, soon after, it bounced back to Rs 17.6 in 2018 with CIC to GDP ratio rising from 8.2% to 10.3%. Since then, it has only seen an upward trend. The ratio has further risen to 21.4%, 23.5% and 27.6% respectively in the financial year 2019, 2020 and 2021 respectively.

The Covid-19 Wave

There was a definite slowdown in the cash circulation during the covid wave. This was another unexpected abrupt turn of events that not just India but the entire world fell prey to. As the Covid-19 first wave hit India very strongly, and the entire country went into a complete

lockdown. With complete lockdown, came a complete standstill on all activities, all transactions, all businesses. ATM withdrawals did see a significant drop from Rs. 2489 Billion in March 2020 to Rs 1291 Billion in April 2020.

However, the same rose to a whopping Rs. 2849 Billion in March 2021. Similarly, the cash circulation was again impacted when the second wave hit the country. Cash flow again came down owing to major lockdown and a halt in everything all over the country. However, as India begins to rise from the aftermath of the second wave, the cash flow is rising too. Faster than ever. As we are starting to resume normalcy and restrictions are easing, cash circulation is rising high and fast.

The Rise of Online Shopping

Even in the consumer market, online shopping has definitely grown manifold. However, the focus is still on cash payments. Internal research shows that while online shopping has exploded in the midst of the pandemic with a significant rise in digital payments, Cash on Delivery still manages to be a dominant player with 60-70% of transactions. Not only this, data further shows that more than 50% of customers are more likely to keep the cart abandoned if they are not provided with a CoD option.

Some statistics even suggest that even during the second wave, 46% of people were preferring the CoD mode of payment. Now as we are recovering from the second wave, this number is only going higher. India is a cash-driven country, it is likely to stay like that for a significant period of time. The trends are very telling of that.

Even with the ease of digital payments, understanding of the same and having all the infrastructure in place to make India more digitally driven, the expectation of her becoming a cashless economy is a bit unrealistic. No matter the situation India is in, cash always bounces back. And that is here to stay.

The Author is Vijay Sandilya, Head of Marketing, GoKwik. 

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