According to the data shared by CMS Info Systems, a cash circulation management firm monitoring 115,000 ATMs and retail outlets across India, the use of cash had dropped to 38% in March 2020 of what was used in February 2020. This was the result of the pandemic spread and the nationwide lockdown.
It stated that the figures raised to 75% in June and July 2020 as compared to February 2020. In August 2020, the figures are short by 10% to that of February 2020.
The firm specified that the data is analysed based on the cash withdrawals at ATMs and other retail outlets. It also mentioned that the demand and consumption levels hint that they could be coming back.
Cash used in rural areas was found to be higher as compared to the semi-metros. The cash used in metro cities is far lower says the report due to the impact of COVID-19.
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Indians were also observed buying gold in record-high figures. Spending on jewellery was 13% higher during the lockdown compared to the pre-COVID-19 levels. This can be seen in the light of preparing funds/assets for the next unexpected crisis since liquid money can get exhausted and investing in mutual funds and stocks may not turn out to be beneficial during the times of a crisis.
On the flip side, COVID-19 has snatched away the savings of many Indians, making them reorganise their priorities and the way they spend their finances. This may force the citizens to delay the retirement since lakhs of employees have dug out the retirement fund, i.e. EPF balances, to survive through the tough times.
For any clarifications/feedback on the topic, please contact the writer at apoorva.n@cleartax.in
