Sharp decline seen in digital transactions in two successive months. This goes against the government’s move towards making India “less cash” economy.
The sudden surge in digital transactions during the demonetisation period is now witnessing a sharp reversal.
Data for February shows an accelerated pace of decline in electronic transactions. February 2017 saw a month-on-month decline of 21.3 per cent in the volume of electronic transactions, higher than the 9.1 per cent fall seen in January 2017 over December 2016.
According to data released by the Reserve Bank of India, the decline in value terms also accelerated in February over January 2017. The decline in electronic payments is being seen as reflective of the improved cash availability situation over the last couple of months since 500 and 1000-rupee notes were scrapped on November 8 last year.
The decline in digital transactions in two successive months goes against the government’s stated objective of scrapping high-value currencies — that of moving towards a “less cash” economy.
The biggest fall in usage was seen for cheque payments, use of debit and credit cards at point of sale terminals and mobile banking, that had emerged as preferred modes of payment following the lack of availability of cash during the demonetisation period.
The data shows that in volume terms, transactions through electronic payment modes fell 21.3 per cent from 870 million in January 2017 to 684 million in February.
In value terms, the decline was 16.7 per cent from electronic transactions valued at Rs 97,011 billion in January 2016 to Rs 80,765 billion in February 2017.