For its significance and all it was meant to achieve, Demonetization remains one of the less explored themes within our daily newsletter.
For many reasons, we thought — maybe it’s better not to dive too deep.
- The content itself would be very cumbersome, not appropriate for what is supposed to be a friendly daily newsletter.
- It’s almost impossible to have a rational discussion with either side (for or against) since both feel very strongly about it. The subject is almost political.
- Can we even show just one data point and have a conversation around it? Isn’t it important to show a multifaceted picture — reflective of reality?
So we decided to do the following, provide the broad data that we think is significant of the event and ask you to comment on it. Through a series of newsletters (sent out at random), we’ll share these data points and hopefully get a perspective from our readers as to its significance.
The following table is a break up of online orders vs. Cash on Delivery orders for the e-commerce universe in India.
Was there a perceptible change in the proportion of online payment orders to cash on delivery orders?Yes.
Did the magnitude surprise us? Absolutely, we expected these changes to more dramatic. Why was the change not more significant?
Well, one reason we feel is a good candidate for the cause, is that — the population that shops online — already had access to debit and credit cards. They did not need demonetization to tell them to go cashless. They were already as cashless as they were planning to be.
Even a 1.5% change in the context of a nation is large but is this result worthy of the stated objective? I would say it is simply one data point. The population for whom the change would have been most dramatic does not shop online.
Post demonetization, these people had access to cash again. One simple theory is that they were able to change the cash they were holding on to through whatever means they found at the time. The other possible reason is that people continued to earn a portion of their income in cash that continued to come in cash even after the government directive — just in new notes.
People’s habits will change slowly. If you are one stakeholder in a value chain — then remember the entire value chain needs to be willing to change for a cashless economy to truly permeate.
Go to old Delhi and ask the traders there if the proportion of cash in their businesses has changed significantly and you’ll realize what I mean. One trader may want to reduce the amount of cash deployed in his business but then so must his supplier and customer and his supplier’s supplier and customer’s customer and so on.
In the coming weeks and months, we’ll share more such data points and hopefully get a better sense of the impact that changes in policy have had on consumers and businesses. We would love to combine your anecdotal experiences and our data to see what comes out.
If there’s specific data that you feel is relevant and want us to explore, get in touch!
Thanks for your time,
Ashish
- Team KG
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You can reach me on ashish@kalagato.com
