Data show withdrawals from ATMs have remained largely the same since lockdown was lifted, while UPI payments ballooned — signs of behavioural change, even as currency in circulation goes up
One of the reasons demonetisation was implemented was to convert India’s economy into a “less cash” one, according to Prime Minister Narendra Modi. However, what the note ban could not do in this regard, is instead being achieved by the COVID-19 pandemic.
The fear of the virus and the resultant behavioural changes have meant that the amount of money being withdrawn from ATMs has remained largely the same, about Rs 2.6 lakh crore, for about two years since the nation-wide lockdown was comprehensively lifted in October 2020.
Contrast this with what happened after demonetisation, where ATM withdrawals recovered quickly and reached pre-note ban levels within a year, and then exceeded them over the subsequent 2.5 years until the lockdown.
TCA Sharad Raghavan 