The demonetisation of Indian currency was six years ago. This was done to curb black money and keep a check on transactions. Do you think it was effective? What do you think is the current situation in India? Let us look at the current scenario of transactions in Indian real estate industry in more detail.
According to research, six years after high-value currency was demonetised to weed out black money in circulation and slow the rise of the parallel economy, people are still paying or accepting black money in real estate transactions.
The research was conducted by LocalCircles, a local social networking platform. It found that “people are still selling and buying things like hardware, paints, and many other household and office accessories as well as delivering services without official receipts.” It noted that up to 44% of individuals surveyed who purchased a house in the last 7 years stated that they had to pay a portion in cash.
REAL ESTATE DEALS sINCE DEMONETISATION
More than 32,000 people from 342 districts in India responded to the study. They were asked: What proportion of the purchase price of a property (land, house, flat, store, office, etc.) did you or your family have to pay in cash in the last seven years? According to the study, nearly 8% of the 11,499 respondents said they had paid more than 50% in cash, 35% would not disclose, 21% said they had paid nothing in cash, 15% had paid between 30 and 50% of the transaction in cash, 13% had paid 10 to 30%, and the remaining 8% had paid up to 10% of the value in cash.
According to the poll, 70% of respondents acknowledged paying cash as part of the transaction for property purchased within the preceding seven years. The statistics for this year show that things have significantly improved.
According to the most recent poll, 8% of cases now admit to paying more than half of the cost in cash, down from 16% in 2021.
Unfortunately, there have been virtually no reforms in the sphere of property sales, therefore bribery is also widespread. Due to property owners’ desire to avoid paying the entire amount of taxes associated with the transaction, the original purchase of the land or property is still largely made in cash, “LocalCircles’ founder, Sachin Taparia, remarked.
Which kinds of services did you pay in cash (without a receipt) for over the past 12 months? 20% of respondents mentioned domestic worker pay, 3% mentioned travel costs, 10% mentioned personal services or home repairs, and so on. Additionally, 38% of respondents mentioned domestic worker salary and personal services/home repairs, 3% mentioned travel costs and personal services/home repairs, and 16% mentioned all three categories.
Groceries, eating out, and food delivery (76%); domestic help salaries (74%); personal services/home repairs, etc. (67%); travel (22%); long-term assets or valuable items (15%); gadgets (7%); and other goods and services (20%) are the top areas where most households surveyed used cash in the previous 12 months.
This shows that many people have not yet switched to or adopted digital payment systems, perhaps because it is more practical to pay in cash while buying fruits, vegetables, or a few groceries from a store, or for other reasons like voucher payment. It is very difficult to begin seeing some reduction in the amount of cash in circulation unless we see one-third of the population on both the supply and demand sides using the digital payment mechanism.
It is anticipated that efforts to extend the UPI’s integration outside of Indian borders would accelerate this growth momentum. The Prepaid Payment Instruments (PPI-mobile wallets) and the Unified Payments Interface (UPI) have lower average monthly transaction values, which indicates an increasing trend toward retail digital modes for handling low-value transactional needs.
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