The total value of the currency in circulation in the Indian economy has almost doubled in the six-year period since demonetisation. The value of the total currency in March this year has gone up 89% to ₹31,05,721 crore, compared with Rs 16,41, 571 crore as of March 2016, the Finance Ministry told the Parliament today.
According to data shared by the ministry in Lok Sabha today, the volume of currency in terms of the number of notes in circulation to has jumped 44% to 1,30,533 million in March, 2022.
Data shared by the ministry in response to a question showed that the value of notes in circulation dipped 20% from ₹16,41, 571 crore in March, 2016, to ₹13,10,193 crore in March 2017 – about five months since November 8, 2016, when Prime Minister Narendra Modi announced demonetisation of the Rs 500 and Rs 1000 denomination notes.
However, in the next year till March 2018, it witnessed a meteoric rise year on year, rising 37.67% to Rs 18,03,709 crore. Ever since then, the value of the currency in circulation has been rising steadily in the economy.
“The demand for currency depends upon several macro-economic factors including economic growth and level of interest rates,” the ministry said in the reply.
The mission of the Government is to move towards a less cash economy to reduce the generation and circulation of black money and to promote the digital economy.
On the steps taken by the government to promote digital payments in the economy, the ministry said in the reply, “Through Finance (No.2) Act, 2019, the section was inserted to the Income-tax Act, 1961 to provide that every person, carrying on business, shall, provide facility for accepting payment through the prescribed electronic modes, in addition to the facility for other electronic modes of payment, if any, being provided by such person if his total sales, turnover or gross receipts in business exceeds fifty crore rupees during the immediately preceding previous year.”
“In addition to the above, amendment was also made to the Payment and Settlement Systems Act, 2007 so as to provide that no bank or system provider shall impose any charge upon anyone, either directly or indirectly, for using the modes of electronic payment prescribed under section 269SU of the Act,” said the ministry.
