Note in Circulation Rise 8% Annually to Rs 32 Lakh Crore: The note in circulation (NiC), according to Finance Minister Nirmala Sitharaman, increased by 7.98% annually to reach Rs 31.92 lakh crore as of December 2, 2022. The demand for currency depends upon several macroeconomic factors, including economic growth and level of interest rates, she said.
December 2022 Current Affairs Quiz
More About This: Cash Is Still King:
The amount of money in circulation has increased to a record high of Rs 32 lakh crore six years after demonetisation, demonstrating that cash is still Indians’ preferred method of payment. Compared with the pre-demonetisation period, Since November 4, 2016, when it was Rs 17 lakh crore, it has grown by a staggering 72%. The demonetisation (of Rs 500 and Rs 1,000 notes that ceased to be legal tender) was announced by Prime Minister Narendra Modi on November 8, 2016, with the aim of reducing the circulation of black money in the economy, among other objectives.
Key Points Regarding This:
- While comparing absolute numbers, it is important to compare them with the GDP, as it is the key indicator of measuring cash in the system in tune with economic growth. A back-of-the-envelope calculation shows that at present, currency in circulation is at 13 per cent of GDP compared to 14 per cent last year.
- • The Reserve Bank of India (RBI) injected money into the system following the Covid-19 pandemic, bringing the figure down to 13% in 2020. Incidentally, the cash in circulation as a percentage of GDP was at 12 per cent in 2016.
- While the cash in circulation has gone up, digital payments have also been on the rise. According to data from the banking regulator, the RBI-Digital Payments Index, which tracks digital payments, rose 29.08 per cent to hit an all-time high of 349.3 points in March 2022 from 270.59 points a year ago.
