After 5 Years Of Demonetization, Public Says "In Cash We Trust!"

by GoNews Desk 2 years ago Views 5512

5 Years After Demonetization, Cash Circulation Inc
It seems like the motto found on all US Dollar notes (or 'bills', as they say) 'In God We Trust'  has an updated version when it comes to cash in India. Five years have passed since demonetization and it is clear that all notions of a ‘less cash’ economy have come to nought, and in fact, the circulation of cash has increased in this 5-year period. This is after ‘transitioning’ the economy away from cash towards digital modes was one of the main ideas and reasoning given for the extremely disruptive demonetization move.

Although it is true that the volume of digital transactions has increased, there is a large section of the Indian population that still believes in and relies on cash transactions. According to the Reserve Bank of India’s Annual Report 2018, there was ₹16.41 lakh crore in circulation during the financial year 2015-16.

After the announcement of demonetization (or ‘notebandi’ as it is popularly known), there was certainly a reduction of cash in circulation, but people started losing faith in digital transactions from the next year itself. Though there was a drop in circulation during 2017 but increased to more than double in the subsequent year. As per the report, there was ₹13.35 lakh crore in circulation in 2017 which jumped to ₹28 lakh crore in March 2021.

Before demonetization, the total value of ₹1000 and ₹500 notes in circulation was ₹15.44 lakh crore. Of this, there were 6,857.82 million notes of ₹1000 circulating, i.e., ₹6,85,782 crore, and 17,165.06 million notes of ₹500 with a total value of ₹858,253 crore. 98.96% of these two banned denominations were returned to the RBI.

The RBI had begun circulating 2.94 lakh new ₹500 notes with the Demonetization announcement, afterwhich there was a constant increase in the number of the new serial-numbered notes in circulation.  

The RBI says that the number of ₹500 notes in circulation was 7.73 lakh in 2017-18, 10.7 lakh in 2018-19, and 14.7 lakh in 2019-20. But now, this number has reached 19.3 lakh in 2020-21.

If we look at the ₹2000 notes in circulation, it has shown a constant decrease since 2018-19, even though more of them were released into the economy than notes of ₹500 denomination. Back then, 6.57 lakh ₹2000 notes were issued, and by 2018-19, the number of ₹2000 notes increased to 6.72 lakh. After this it began falling and at present the number of these notes in circulation is 4.9 lakh.

In its latest annual report of May 2021, the RBI announced that new notes of ₹2000 will not be printed from 2021-22. The RBI had stopped the circulation of ₹2000 notes before as well.

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