MUMBAI: Those who are still counting down the days to a digital era for the country’s economy will be in for a shock to find that cash has once again grown past its pre-demonetization levels to become the proverbial king once again.
The currency in circulation has for the first time (at least in the recent history) surpassed the 18,000 billion-mark to reach Rs18,277 billion as on March 23 – the latest available data shows.
It was on November 8, 2016 that Prime Minister Narendra Modi gave the people of the country the shock of their life through the announcement that all Rs500 and Rs1000 currency notes were to be withdrawn from the system. People were given 50 days’ time to exchange their old notes with new ones or deposit the old currency stock at the banks, leading to scenes of serpentine queues in almost all banks.
With the Rs500 and Rs1000 notes constituting almost 86 per cent of currency notes, the volume of currency in circulation dropped drastically after the demonetization, leaving day-to-day transactions a nightmare for the rich and the poor alike.
But the uninitiated people hoped for a better tomorrow with less hard currency in the system and most transactions shifting to digital modes.
The statistics retrieved from the RBI documents show that the currency in circulation, which was hovering around a record Rs17,977 billion as on November 4, 2016 – four days prior to the D-day, dropped to Rs14,272 billion on November 18 following the demonetization, and to a mere Rs9,819 billion towards December 9, 2016.
But the opening of the next year – 2017 saw a reversal in the volume of currency in circulation, which reached Rs10,169 billion on January 27, 2017 and thereafter steadily growing to cross Rs16,000 billion by October and to settle at Rs16,004 billion on the 6th day of that month.
March 2018 saw the currency in circulation winning back the pre-demonetisation levels, and the same month saw the volume crossing the Rs18,000 billion for the first time and reaching Rs18,277 billion on March 23, 2018.
Though the demonetization drive was claimed to have aimed at curbing black money and paving a foundation for the digitization of the economy, by the end of August 2017, 99 per cent of the banned currency had reached the bank counters giving a shock to the black money bashers.
This poor show was criticised widely as a result of lack of planning and the absence of a proper direction in the steps the government took in achieving its targets.