An official shows new currency notes of Rs 500 at State Bank of India head office in New Delhi (Source: PTI)

Cash Is Back... Almost

Cash in India is almost back to levels seen before demonetisation. At least in absolute terms.

The currency in circulation by Jan. 12 stood at Rs 17.2 lakh crore, 81.5 percent higher compared to the same time last year, according to weekly data released by the Reserve Bank of India. That compares with Rs 17.97 lakh crore at the time note ban was announced.

On Nov. 8, 2016, Prime Minister Narendra Modi scrapped old Rs 500 and Rs 1,000 notes to crack down on black money. Nearly 86 percent of the currency in the system was no longer legal tender as Indians scurried to banks to deposit old notes.

Cash Is Back... Almost

The remonetisation process is now complete and the increase in currency is more linked to organic factors such as growth in the economy, inflation and the use of physical cash.

However, cash in the system as a fraction of the gross domestic product remains well below the pre-demonetisation level. Currency in circulation as a percentage of the nominal GDP estimate for the year ending March is at about 10.4 percent. Prior to the note ban, it was around 12 percent.