Currency in circulation is almost at pre-demonentisation levels at 99.17 percent. It has taken fifteen months for the currency in ciruclation to get back to the levels of November 04, 2016, the last week end before Prime Minister Narendra Modi
banned Rs 500 and Rs 1000 notes which constituted close to Rs 8 lakh crore.
Total currency in circulation is at Rs 17,82 lakh crore as of February 23, according to the latest Reserve Bank of India data. This is about 99.17 per cent of pre-note ban levels of Rs 17.97 lakh crore on November 04’ 16.
Currency in circulation contracted to almost half its levels on November 04 at Rs 17.97 lakh crore the latest week end before the government announced a ban on Rs 500 and Rs 1000 notes to tackle corruption, black money and terror funding among others to Rs 8.93 lakh crore on December 30, the last day to surrender the banned currency notes.
Subsequently, payments through digital modes rose very sharply for several months. But since January’18, currency in circulation has picked up sharply by around Rs 89,000 crore, while growth in various types of digital transactions has slowed down. “Yes, compared to cash, it (digitisation) is smaller and there is this other fact that it is not growing as seen during demonetisation
” said Sangram Singh, CEO, FreeCharge, a company owned by Axis BankBSE -1.47 %
But economists are not clear as to what is driving the recent surge in currency in circulation, even as there are claims that demonetisations has facilitated digitisation of transactions in the economy bringing more transactions in the banking system. Currency in circulation often surges at times of big elections. But his time round economists are not too sure and some attribute to rise in cash to revival of economic activity. Bu there is no clarity on whether digitisation is going to penetrate further. “The jury is still out on is still out on what levels will digitisation of payments stabilise” said S K Ghosh, group chief economic advisor at State Bank of India.
Even as people in advanced economies are using less paper money, there is more cash in circulation—a record $1.4 trillion in US dollars alone, or $4,200 for every American, mostly in $100 bills, said Harvard professor Kenneth Rogoff in his recent book, ‘The Curse of Cash’.
via Narendra Modi | Demonetisation: Currency in circulation almost at pre-demonetisation levels