India Finding it Hard to End Love Affair With Cash

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.

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.

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).

"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.CASH PILES

But the action so far has not deterred wily and wary Indians.

"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.

"Property sales have slowed in Delhi, but not just because of demonetisation," said a real estate agent in the capital, who asked that his name not be revealed.

"Cash is more difficult, but more often than not there are big piles of notes on the table," he added.

The owner said he doubled sales last year to 20 million rupees owing to the government action.

The government's "longer-term success will depend on whether Indians return to cash in large numbers," the Stratfor consultancy said in a recent report.