Cash Continues to Dominate Daily Commerce in Rajkot Despite Digital Payment Surge
In the bustling city of Rajkot, while Unified Payments Interface (UPI) has become the preferred payment method for retail transactions, traditional cash still reigns supreme in many aspects of daily trade. This is particularly evident in the centuries-old markets of the old city and among unorganized sectors such as vegetable vendors, fruit sellers, small traders, and autorickshaw drivers, where cash remains the undisputed king of transactions.
The Persistent Reign of Physical Currency in Traditional Markets
Indian weddings, an integral part of the cultural fabric, are also incomplete without the exchange of crisp currency notes, further cementing cash's role in social and economic rituals. However, a growing crisis is emerging: a severe shortage of notes and coins in small denominations—specifically Rs 10 and Rs 20—is causing significant daily inconveniences for both traders and customers across the city.
The Reserve Bank of India introduced Rs 10 and Rs 20 coins several years ago, but initially, Rajkot was among the cities where people were hesitant to accept them. Visitors from other regions were often taken aback when local shopkeepers refused these coins. To address this reluctance, the district administration intervened proactively.
From Reluctance to Acceptance: The Evolution of Coin Usage
Traders were encouraged to display boards stating "Rs 10 and Rs 20 coins are accepted here," while auto-rickshaw drivers affixed similar stickers in their vehicles. Social media campaigns played a crucial role in shifting public perception, leading to widespread acceptance of these coins. Today, they are commonly used, but ironically, their scarcity has now become a pressing concern, creating new challenges for the local economy.
Hitesh Anadkat, president of the Rajkot Textile Merchants Association, highlighted the struggles faced by people when paying for essentials like groceries, medicines, vegetables, and small services such as photocopies. He explained, "Customers sometimes have to purchase extra items just to adjust for the lack of change. In other instances, traders absorb the loss themselves. We recently made a formal representation on this issue to the lead bank in Rajkot just three days ago, urging immediate action."
Economic Impact and Competitive Market Pressures
According to local traders, the small amounts they forgo due to the change shortage accumulate over time, becoming significant in a highly competitive market environment. Areas like Dharmendra Road and Lakhajiraj Road, renowned for their historic markets dealing in garments, utensils, and imitation jewellery, attract numerous visitors from rural Saurashtra. Most of these customers prefer cash payments, with traders estimating that over 60% of transactions in these markets are still conducted in cash, underscoring the ongoing reliance on physical currency.
Mansukh Sakariya, leader of the opposition in the Rajkot district panchayat, has written to the Union finance minister seeking urgent intervention. He emphasized, "It is the peak wedding season, and many traditional rituals require small denomination notes. There is an acute shortage, forcing people to use mutilated notes instead of fresh currency, which disrupts ceremonies and daily commerce."
Vulnerable Groups Most Affected by the Shortage
Farmers, rural customers, and senior citizens who are less familiar with digital payment platforms are among the worst-hit by this shortage. Their reliance on cash for everyday transactions makes them particularly vulnerable to the disruptions caused by the scarcity of small denominations, highlighting a digital divide in the adoption of modern payment methods.
This situation in Rajkot serves as a microcosm of a broader trend in India, where digital payments like UPI are booming, yet cash continues to hold sway in many traditional and informal sectors. The shortage of small denomination currency not only inconveniences daily life but also poses economic challenges for traders operating on thin margins in competitive markets.
