Cash component in property transactions rising: Survey

According to a survey released on the eve of the demonetisations anniversary, the cash component in property transactions seems to be rising. The survey, which was conducted among 44,000 people from 363 districts by social media platform Localcircles, noted that 24 per cent of the respondents said they did not have to pay in cash while buying a property, as against 30 per cent just two years ago.

Demonetization Effect

On November 8, 2016, Prime Minister Narendra Modi announced scrapping of Rs 500 and Rs 1,000 notes, representing over 86 per cent of the currency in circulation by value to reduce the reliance on the cash in the economy. The survey said over three-fourths of the respondents who bought a house in the last seven years since demonetisation have paid a portion of the deal amount in cash.

How much cash?

Over 28 per cent of the respondents said 10-20 per cent of their property deal amount was paid in cash, 15 per cent said over half of the amount was paid in cash, while 18 per cent said 30-50 per cent was paid in cash. All cheque payments are more an exception as citizens surveyed revealed that only select builders selling flats and villas in large developments demand all cheque payments for the transaction.

Digital Transactions

Meanwhile, even as digital transactions reach newer highs, the survey findings said that 82 per cent used cash for purchases in the last one year to pay for groceries, eating out and food delivery.

The survey findings indicate that despite the government's push for digital transactions, cash still remains the preferred mode of payment for a majority of Indians. This could be due to a number of factors, including the lack of access to formal banking services and the convenience of using cash.