Currency In Circulation Rises Rs 3.23 Lakh Crore In First Nine Months Of FY21
The currency in circulation rose in the country in the first nine months of the ongoing fiscal as people preferred holding on to cash as a precautionary measure amid the uncertainty caused due to the Covid-19 pandemic.
Currency in circulation grew by 13.2% to Rs 27.7 lakh crore as on Jan. 1, 2021, from March 31, a year ago, according to recent data released by the Reserve Bank of India.
In the April-December period of FY2020, it had grown by nearly 6%.
Madan Sabnavis, chief economist at Care Ratings, attributed the trend to people accumulating more cash to meet any exigency during the pandemic-induced lockdown.
“Whenever there is a crisis-like situation, there is a tendency for households to latch on to cash,” he said. “That is the reason there has been an increase in demand for cash. What you see is nothing else but a precautionary motive overwhelming everything.”
The RBI in its annual report for 2019-20, released in August 2020, had also mentioned that demand for currency started to increase in the wake of heightened uncertainty caused by the pandemic.
The central bank also took a series of measures in order to meet the enhanced demand.
Currency in circulation in 2020 grew 22.1%, or Rs 5.01 lakh crore, to Rs 27.7 lakh crore as on January 1, 2021.
Currency in circulation includes banknotes and coins. At present, RBI issues notes in denominations of Rs 2, Rs 5, Rs 10, Rs 20, Rs 50, Rs 100, Rs 200, Rs 500 and Rs 2,000.
Coins in circulation comprise those of 50 paise and Re 1, Rs 2, Rs 5, Rs 10 denominations, and the recently launched coin of Rs 20 denomination.
As per RBI’s annual report, the value and volume of banknotes in circulation increased 14.7% and 6.6%, respectively, in FY20.
In value terms, Rs 500 and Rs 2,000 banknotes together accounted for 83.4% of the total value of banknotes in circulation at end-March 2020, with a sharp increase in the share of Rs 500 banknotes, it had said.
In volume terms, Rs 10 and Rs 100 banknotes constituted 43.4% of the total banknotes in circulation at end-March 2020, RBI had said in the annual report.