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    Three years of demonetisation: Cash is king in 66% of real estate transactions

    Synopsis

    A majority of Indians continue to make a substantial percentage of their total annual purchases in cash, the survey said. About 40% people said anywhere between 5% to 25% of their total purchases were in cash, 29% said anywhere between 25% to 50% of their purchases were in cash and 27% said at they paid cash while purchasing almost every item in last year.

    Agencies
    Two third of the real estate transactions saw a cash component of anywhere between 10% to 50%, as per a survey by LocalCircles, a community platform.
    MUMBAI: Three years after Narendra Modi in an address to the nation banned Rs 500 and Rs 1,000 currency notes digital transactions are increasing year over year but large number of people still prefer cash transactions over digital transactions as per a survey. The survey also pointed out that black money continues to dominate the real estate market despite the demonetisation of currency notes.

    When asked how much cash did they pay while buying a property only 33% of the respondents said that they did not make any cash payment and paid the full amount by cheque or e-payment. All the remaining 66% of the respondents said that they used some amount of cash while buying a property in last one year. Two third of the real estate transactions saw a cash component of anywhere between 10% to 50%, as per a survey by LocalCircles, a community platform.

    A majority of Indians continue to make a substantial percentage of their total annual purchases in cash, the survey said. About 40% people said anywhere between 5% to 25% of their total purchases were in cash, 29% said anywhere between 25% to 50% of their purchases were in cash and 27% said at they paid cash while purchasing almost every item in last year. This however is still an improvement over last one year, the survey said as more people did larger number of purchases in cash.

    When asked how much cash did they pay while buying a property only 33% of the respondents said that they did not make any cash payment and paid the full amount by cheque or e-payment to the seller. All the remaining real estate transaction saw a cash component of anywhere between 10% to 50%.

    “An important goal of demonetisation was to reduce the use of cash in transactions and encourage people to pay using non-cash modes, but the use of cash in the Indian economy does not seem to be reducing,” the survey pointed out.

    Although almost 75% of the respondents felt there were some benefits of demonetisation. “People were asked that 3 years after demonetisation, what do they think was its top benefit. 21% said it reduced black money in the economy and 12% said it increased direct tax collections. 42% said it brought a large number of evaders in the tax net while 25% felt demonetisation had no benefits at all,” the survey said.

    When asked about the negative impacts of demonetisation, 32% said it was loss of earnings for many unorganised sector workers and 2% said it was sizable migration of labour to villages and lower rural income. About 33% said the biggest negative impact of demonetisation is economic slowdown while 28% feel it had no negative impact. It has also been reported that the amount of fake currency seized in the last 3 years has considerable shot up when compared to the pre-demonetisation times, the survey said.
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    16 Comments on this Story

    Praker 242 days ago
    Its time for properly planned demonetization of inr 2000 bank notes. Also all real estate related transaction should happen like in stock market.. All sell and buy should be transparent and buyer and seller should never meet before the purchase. All money transfer should be via banks. The property assurance should be done a third party on behalf of seller. They should rate the property based on condition of asset. Value of the asset should be determined by the market and method should be similar to stock market. All property documents should be degitalised and kept maintained by banks. Registration office should be for non property transaction only. Stamp duty rates should be like STT and reduce it to 1 percent of value of property.
    sri247 days ago
    If the mentality of all the Indians were strict disciplinarian and patriotic things would have been more different. Unfortunately, everyone wants to get rich quick by fly wire technique. The people governing have failed and are failing in all governmental departments because they are CORRUPT!
    Ramanujam Veraswamy248 days ago
    Black money still play vital roll in real estate transactions. More than 50% of the consideration is paid in black money/cash, even today. Unless this menace is addressed no chance of removing black money.
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