The RBI report shows that on November 4, currency worth Rs 17.7 lakh crore was in circulation among the people. This thing happened 4 days before 8th November 2016 when demonetisation was imposed in the country. In demonetisation, India’s largest note currency, 500 and 1,000 rupee notes, was taken out of circulation.
RBI and SBI have released the report on cash circulation
6 years have passed since demonetisation. Now the debate on its advantages and disadvantages is going on. government is of the opinion that demonetisation in the country digital economy gave a new direction to and reduced the dependence on cash. The same opposition alleges that demonetisation was done to stop black money and reduce cash, while this could not happen. In this context, the reports of two institutions of the government are worth mentioning. Country’s largest public sector bank regarding demonetisation, cash circulation and digital economy, State Bank Of India and central bank Reserve Bank Of India has given its report. There is a difference between the two reports.
The Reserve Bank has recently released its report on demonetisation and currency circulation. According to the recently released currency circulation data by the Reserve Bank on a fortnightly basis, till October 21 this year, the level of currency in circulation among the people has increased to Rs 30.88 lakh crore. This figure was Rs 17.7 lakh crore in the fortnight ended November 4, 2016. In this way, the level of currency in circulation has increased by 71 percent since demonetisation.
What does RBI report say?
The RBI report shows that on November 4, currency worth Rs 17.7 lakh crore was in circulation among the people. This thing happened 4 days before 8th November 2016 when demonetisation was imposed in the country. In demonetisation, India’s largest note currency, 500 and 1,000 rupee notes, was taken out of circulation. Despite this, the circulation of currency increased by 71% in the next six years and more than Rs 30 lakh crore currency came among the people.
This happened because the old notes were closed and the old notes went out of the hands of the people to the banks, but in their place new notes also came fast. People started suppressing these new notes. This is the reason that now the situation of confusion has arisen on the new note of 2000 rupees as to what will happen next.
The RBI report focuses on how much the amount of cash in the system has increased. On the other hand, the report of economists of State Bank shows how much digital payments have increased in the system. The SBI report also tells how much ‘cash in currency’ i.e. the amount of CIC has decreased in the system. While the RBI report talks about an increase in cash circulation in the entire six years, the SBI report has claimed that for the first time in the last 20 years, this time there has been a decrease in currency circulation on Diwali.
What is SBI report
According to the State Bank report, the share of CIC in the payment system declined from 88 per cent in 2015-16 to 20 per cent in 2021-22. It is expected to come down to 11.15 per cent by 2026-27. Similarly, digital transactions increased from 11.26 per cent in 2015-16 to 80.4 per cent in 2021-22. This is expected to increase to 88 percent by 2026-27.
It is clear from the SBI report that cash has become a trend and people’s attention has increased more towards digital transactions. In digital, UPI, IMPS, NEFT and mobile wallet payments are the main ones. In this, the contribution of UPI is more which is around 16% whereas IMPS has contributed 12%. If we talk about new retail digital transactions, then mainly 55 percent has been the share of NEFT. The SBI report shows, the share of digital transactions has been steadily increasing from 11.26 per cent in 2016 to 80.4 per cent in 2022 and is expected to reach 88 per cent in 2027.