Mumbai: As of October 21, there was a record amount of currency in circulation, totaling Rs 30.88 lakh crore. This shows that, even six years after the demonetization decision, there is still a strong demand for cash.
The public’s money is now Rs 30.88 lakh crore, which is 71.84 percent more than it was for the fortnight that ended on November 4, 2016. With the ultimate goal of decreasing corruption and dirty money in the economy, Prime Minister Narendra Modi declared on November 8, 2016, his decision to abolish the Rs. 500 and Rs. 1,000 denomination notes.
The move was made with the intention of making India a “less cash” economy, although it was criticised by many experts for having been poorly planned and carried out.
The RBI issued fortnightly data on the money supply on Friday, showing that as of October 21, there was a rise in the amount of money in circulation to Rs 30.88 lakh crore. On November 4, 2016, the money in circulation was estimated by the central bank’s reserve money to be worth Rs 17.7 lakh crore.
Notes and coins used by the general public for trade settlement, transactions, and the purchase of goods and services are referred to as “currency” in public. The sum is calculated by taking the amount of money in circulation and subtracting the amount of cash held by banks.
Despite the popularity of more recent and practical digital payment alternatives, the economy has seen a steady increase in the use of cash. A boost to such digital modalities came from the COVID-19 pandemic, which focused on contactless transactions.
The subject was briefly covered in a 2019 RBI research report on digital payments.
Data also indicates that, at the same time, the currency in circulation to GDP ratio has also increased in line with the general economic expansion, it said. “Although digital payments have been rising gradually in recent years, both in value and volume terms across countries,” it had added.
“Over time, an increase in digital payments as a percentage of GDP does not seem to inherently indicate a decline in the currency as a percentage of GDP of the country,” it had noted.
Although the ratio of digital payments to GDP in the nation had historically been low, it has been stated that after demonetisation, India has seen a huge surge in digital transactions.
If one excludes the 2009 celebrations, which saw a slight reduction due to the global financial crisis, currency in circulation (CIC) decreased by Rs 7,600 crore during the Diwali week, according to experts at SBI, marking the first such decline in nearly two decades.