Currency With The Public Rose 3 Times Post-Demonetisation: RBI Data

The currency with the public late October was at ₹28.25 lakh crores as compared to ₹9.11 lakh crores in November 2016

Fortnightly data from the Reserve Bank of India [RBI] shows currency with the public as on October 22 this year rose 3 times as compared to end November 2016. While ₹28.25 lakh crores was outstanding as currency with the public end of October this year, this figure was at ₹9.11 lakh crores as of end November, 2016.

The currency in circulation has also doubled post demonetisation. As of the week ending October 29, ₹29.44 lakh crore was the outstanding currency in circulation. For the week ending November 18, 2016, the currency in circulation was ₹14.4 lakh crores. The latter figure captures the post demonetisation slump in currency post-demonetisation.

Currency in circulation is not the same as currency with the public. Here's how the RBI differentiates between the two terms:

Currency in circulation' includes notes in circulation, rupee coins and small coins. Rupee coins and small coins in the balance sheet of the Reserve Bank of India include ten-rupee coins issued since October 1969, two rupee-coins issued since November 1982 and five rupee coins issued since November 1985. Currency with the public is arrived at after deducting cash with banks from total currency in circulation, as reported by RBI.

However, the data also show substantial growth in currency across both these terms were generated during the pandemic.

In the year ending October 29, 2020, ₹4.57 lakh crore was added as currency in circulation, an increase of 20.3% year on year, whereas in the year ending October 29, 2021, the increase was slower at ₹2.29 lakh crore or 8.5%. Similarly, currency with the public also rose ₹4.58 lakh crore, or 21% year on year as of October 2020 ( compared to 2019) and ₹2.06 lakh crore in October 2021, or 7.9% over the year before that.

In the months post demonetisation in 2016-17 and the first lockdown of COVID-19 in 2020; currency in circulation rose significantly. However, the monthly rise in cash following demonetisation was greater than those post COVID-19. In the re-monetisation process in January, February and March 2017, currency in circulation rose by more than ₹1 lakh crore every month.

"There was an unusual rise in month over-month (M-o-M) CiC [currency in circulation] variation during April - June 2020 vis-à-vis the corresponding period of previous years due to the onset of the COVID-19 pandemic and a panic-driven surge in precautionary demand for cash as cushion in a health crisis", says the RBI in its annual report from July 2020 to March 2021 (which is nine months, due to a change in its accounting year).

These figures are also quantified through the graph below, as mapped by the RBI.

In calendar year 2020 alone, the currency in circulation increased 22.1% as compared to 11.8% in 2019.

The RBI also expects currency in circulation to have risen in prior and during the second wave of pandemic, but the data of the same will reflect in its next report.

On November 8, 2016, Prime Minister Narendra Modi announced the withdrawal of ₹1000 and ₹500 banknotes from midnight, which was then 86% of the currency in circulation. One of the goals of the demonetisation exercise was to reduce the dependence on cash, promote cashless and digital transactions and curbing terrorism finance and black money.


The government's goal towards digital payments reflects in the promotion of the then newly launched Unified Payment Interface (UPI) in the days just after the move.

While the value of transactions have reached an all time high of ₹7.71 lakh crores in October this year, the months after demonetisation in 2016 witnessed a huge rise.

Data from the National Payment Corporation of India (NPCI) show that in October 2016, the value of transactions through UPI stood at ₹48 crore. This became ₹100.46 crore in November, rising nearly seven times to ₹707.46 crores in December 2016, only to more than double to ₹1,696 crores in January 2017. Since then growth in UPI has been steady.

Growth in the platform also came from the push towards digital payments during the pandemic. In the period from April 2020 to October 2021, the value of UPI transactions shot up from ₹1.51 lakh crore to ₹7.71 lakh crore.

The value of digital payments, however, have fallen in the financial year (FY20 to FY21), owing to fall in transactions related to credit and debit card payments (₹14.34 lakh crore to ₹12.93 lakh crore) and big ticket RTGS payments (from ₹1,311 crore to ₹1,055 crore). Digital payments include UPI, but also NEFT, RTGS, IMPS, Aadhaar-based payments, card transactions as the popularly known choices. "The decline in value of transactions in RTGS is largely attributable to the subdued economic activity", said the RBI in its annual report.

Overall, the value (or turnover) of digital payments fell from ₹1,620 crores to ₹1,414 crores. In contrast, the volume of transactions across all these platforms saw robust growth of nearly 26.2% from 3.41 lakh crore transactions in FY20 to 4.37 lakh crore transactions in FY21.

The RBI data can be found here, NPCI UPI data can be found here and the RBI's annual report here.

Also Read: Explained: Why IRCTC's Share Price Plunged, Govt Reverses Decision

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