How much currency is in circulation now?
THE HANS INDIA |
Oct 10,2017 , 11:51 PM IST
The government on multiple occasions said that a less cash economy was one of the goals of the demonetisation. Recently, the Prime Minister in his address to Company Secretaries at the inauguration of the golden jubilee year of ICSI also mentioned that the cash-to-GDP ratio has come down to 9 per cent, from 12 per cent before demonetisation.
But what is the amount of currency in circulation eleven (11) months after demonetisation? Reserve Bank of India’s (RBI) weekly statistical supplement (WW) shows that the total currency in circulation and currency with public, both are at 88% of the pre-demonetization levels as of September 2017.
The RBI releases a WSS that contains numbers about RBI’s assets & liabilities, foreign exchange reserves, business of the scheduled commercial banks, numbers about the money stock, currency in circulation etc. among other things.
As per RBI definition, currency in crculation includes notes in circulation, rupee coins and small coins. Currency with public is currency in circulation minus the cash with banks.
Demand deposits with banks include all liabilities (excluding inter-bank) that are payable on demand. Time deposits with banks are liabilities (excluding inter-bank) which are payable otherwise than on demand like fixed deposits etc.
The total currency in circulation just before the announcement of demonetisation, as of November 4, 2016 was Rs 17.97 lakh crore. This continuously decreased as old notes were being deposited in banks and reached a minimum of Rs 8.98 lakh crore on January 06, 2017.
This was the only occasion since October 2016 when the currency in circulation went below Rs 9 lakh crore. Since January 2017, the currency in circulation increased continuously as new notes were brought into circulation.
The currency in circulation crossed Rs 15 lakh crore in June 2017 and was at Rs 15.88 lakh crore by the end of September 2017. This is slightly more than 88% of the currency in circulation just before de-monetisation Just before demonetisation, the proportion of currency with the public out of the total currency in circulation was 95.7%.
In other words, out of every Rs 100 in circulation, Rs 95.7 was with the public and the rest Rs 4.3 with the banks. This came down to the lowest of 76.8% towards end of November 2016 when people were depositing all their old notes with the banks. As with the trend of total currency in circulation, the proportion of currency with public slowly increased to 90% in January 2017 and is back to 95% as of mid-September 2017.
Total Deposits in Banks increase by over Rs 6 lakh crore One major fallout of demonetisation is the enormous increase in the amount of deposits in banks. Just after demonetisation (as of November 11, 2016), the total deposits in banks (time & demand together) accounted for a little over Rs 108 lakh crore. This went up to a high of Rs 115.5 lakh crore as of March 31, 2017 (the extended last date for exchange of old notes).
Thereafter, the total deposits have again decreased to reach Rs 114.5 lakh crore as of mid-September 2017. Between November 2016 and September 2017, time deposits have increased by over Rs 4.5 lakh crore while demand deposits increased by over Rs 1.5 lakh crore. (Courtesy: https://factly.in)
By Rakesh Dubbudu