Domestic brokerage Motilal Oswal Securities said that the aggregate value of all transactions under electronic payment systems has failed to witness significant increase even six months post-demonetisation. In a research report titled 'digital payments post-demonetisation', it also pointed out that with cash crunch easing post-December 2016, "there has not been any net addition to total volume of transactions" on a countrywide basis.
"One of the key structural benefits expected from the historic demonetisation announced in November 2016 was a shift towards digital payments. However, the aggregate value of all transactions under electronic payment systems (EPS) has failed to witness significant increase even six months post demonetisation," according to Motilal Oswal Securities.
Here are some other things pointed out by Motilal Oswal Securities:
While the value of transactions in retail digital modes (PoS, PPIs, IMPS and UPI) increased sharply in December 2016, it has stabilized at higher levels since then (up to May 2017)
After falling by more than 60 per cent in the last months of 2016, cash withdrawals from ATMs have moved back to pre-demonetisation levels.
Aadhaar-enabled payments also increased from 2.5 crore in November 2016 to over 5 crore in March 2017 while IMPS or immediate payment service transactions rose from 3.6 crore to 6.7 crore.
"Demonetisation was seen as a boost to digital payments, since approximately 90 per cent of transactions were believed to be taking place in 'cash'. Eventually, digitalisation was expected to help reduce tax evasion and corruption. However, available/estimated data up to May 2017 raises doubts over the increased digitalization in the economy," Motilal Oswal Securities added.
The Reserve Bank of India has said the withdrawal old Rs 500 and Rs 1,000 notes was introduced to tackle increasing fake currency in higher denomination. "India remains a cash based economy hence the circulation of Fake Indian Currency Notes continues to be a menace. In order to contain the rising incidence of fake notes and black money, the scheme to withdraw legal tender character of the old Bank Notes in the denominations of Rs 500 and Rs 1,000 was introduced," according to the central bank.