India finding it hard to end love affair with cash

AFP, NEW DELHI:  Fat wads of bank notes move across counters in Old Delhi’s gold and diamond district in one of many challenges to six months of Indian government efforts to suffocate the black market.
Cash has been king in the musty narrow streets of Chandni Chowk since the jewellery market was set up by Emperor Shah Jahan in the 17th century. The owners now largely shrug off “demonetisation” by modern day ruler Prime Minister Narendra Modi.
In a shock move on November 8 last year, Modi cancelled all 1,000 ($15) and 500 rupee notes in circulation, rendering about 86 percent of India’s currency void.
Amid street protests, the decision triggered massive queues outside banks as the authorities struggled to print enough new notes.
Chandni Chowk is not alone in resisting the digital economy. At least 80 percent of business in India is estimated to be conducted in cash, much of it avoiding tax as well as fuelling corruption.
“I’m sticking to cash,” one gold and diamond dealer, Kapil, who declined to give his last name, told AFP at his store in the backstreets.
“There have been many raids on the shops here so I don’t keep as much stock of ready jewellery as I used to, but I don’t take any cheques or cards,” he said. “Only cash.”
Most of the gold, silver and diamond dealers approached in Chandni Chowk told AFP that while a percentage of their transactions had switched to digital cards, cash still dominates.
Last year Kapil sold jewellery worth nearly 10 million rupees ($155,000) but declared sales of just 500,000 rupees ($7,770). But it is not just the sellers who prefer the tax-friendly cash system.
“Customers still want to pay in cash to save paying tax,” Ranjeev Panjali, whose family has been in the jewellery business for the past 60 years.
The government followed up the bank note action by banning all cash transactions above 200,000 rupees in March. It has promoted e-wallets and offered incentives for businesses that adopt digital payments.
The government said that the amount of tax collected in February was 10 percent higher than for the same month last year. It insists it is looking for long-term change.
But the action so far has not deterred wily and wary Indians.
All sales witnessed by an AFP reporter during a visit to the gold market on a recent afternoon were in cash.
“Demonetisation has had no impact at all,” said the proprietor of a store who declined to give his name. “You can never remove cash from our system.”
Cash withdrawals from bank machines are rising. In March the figure stood at 2.2 billion rupees, up 0.6 percent from the same month last year.

India finding it hard to end love affair with cash

AFP, NEW DELHI: Fat wads of bank notes move across counters in Old Delhis gold and diamond district in one of many challenges to six months of Indian government efforts to suffocate the black market. Cash has been king in the musty narrow streets of Chandni Chowk since the jewellery market was set up by Emperor Shah Jahan in the 17th century. The owners now largely shrug off demonetisation by modern day ruler Prime Minister Narendra Modi. In a shock move on November 8 last year, Modi cancelled all 1,000 ($15) and 500 rupee notes in circulation, rendering about 86 percent of Indias currency void. Amid street protests, the decision triggered massive queues outside banks as the authorities struggled to print enough new notes. Chandni Chowk is not alone in resisting the digital economy. At least 80 percent of business in India is estimated to be conducted in cash, much of it avoiding tax as well as fuelling corruption. Im sticking to cash, one gold and diamond dealer, Kapil, who declined to give his last name, told AFP at his store in the backstreets. There have been many raids on the shops here so I dont keep as much stock of ready jewellery as I used to, but I dont take any cheques or cards, he said. Only cash. Most of the gold, silver and diamond dealers approached in Chandni Chowk told AFP that while a percentage of their transactions had switched to digital cards, cash still dominates. Last year Kapil sold jewellery worth nearly 10 million rupees ($155,000) but declared sales of just 500,000 rupees ($7,770). But it is not just the sellers who prefer the tax-friendly cash system. Customers still want to pay in cash to save paying tax, Ranjeev Panjali, whose family has been in the jewellery business for the past 60 years. The government followed up the bank note action by banning all cash transactions above 200,000 rupees in March. It has promoted e-wallets and offered incentives for businesses that adopt digital payments. The government said that the amount of tax collected in February was 10 percent higher than for the same month last year. It insists it is looking for long-term change. But the action so far has not deterred wily and wary Indians. All sales witnessed by an AFP reporter during a visit to the gold market on a recent afternoon were in cash. Demonetisation has had no impact at all, said the proprietor of a store who declined to give his name. You can never remove cash from our system. Cash withdrawals from bank machines are rising. In March the figure stood at 2.2 billion rupees, up 0.6 percent from the same month last year.