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.
Several factors are helping cash thrive in India, including its large rural population with limited internet access, distrust of the nation’s financial systems and the population’s cultural ties to cold-hard cash. Meanwhile, a thriving underground economy is also keeping use of cash active. 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.