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Currency in circulation
Why is it in the news?
- As per the latest data by RBI, the Currency in circulation (CIC) has jumped by 19.14% to a record high of Rs 21.41 lakh crore as on March 15, 2019 from the pre-demonetisation level.
- It was of Rs 17.97 lakh crore on November 4, 2016, indicating that cash is back in the reckoning in the financial system.
More in the news
- Despite the rise in digital transactions, CIC has increased by over Rs three lakh crore in the last one year from Rs 18.29 lakh crore in March 2018.
- After Rs 500 and Rs 1,000 notes were withdrawn from the system in November 2016, CIC had fallen to around Rs 9 lakh crore on in January 2017.
- Cash in the system has been steadily rising even though the government and the RBI pushed for a less cash society.
- Possible Causes:(1) According to bankers, cash in the system normally increases before the elections.(2) The demand for currency also increases after the monsoons as the harvesting begins in October followed by Rabi sowing, eventually giving rise to cash requirement.(3) The festive season also brings along its natural demand, which gets accentuated with buying of gold, automobiles, increasing the demand for currency.(4) Also there was the expansion of currency in circulation as the pace of remonetisation quickened and eventually, the pre-demonetisation level of CIC was exceeded in March 2018.
Source
Indian Express.