New Delhi, February 12: A surge in the circulation of money was witnessed in January 2019 as the currency in circulation (CIC) touched a new high of Rs 20.65 lakh crore. On 18th January 2019, the money in circulation saw a sudden spike and was way more than the pre-demonetisation high of Rs 17.97 lakh crore, a report by TOI stated. According to the report, the upward trend in the CIC is attributed to the improvement in the informal (unorganised sector) that was hit hard by demonetisation.
The TOI report quoted Pranjul Bhandari, chief economist, India, HSBC said that due to the government's lenient approach on goods and services tax compliance, businesses in India continue to use cash and with the progress of remonetisation, the informal sector has improved. Currency with Public Doubles from DeMo Low; Hits Record at over Rs 18 Lakh Crore.
Reports also inform that the surge in cash circulation can also be linked to general elections. Earlier, several economists including former RBI governor Raghuram Rajan had said that the money in circulation typically goes up around election time. “Around election time, cash with the public does normally increase. You can guess as to reasons why, we can also guess,” Rajan was quoted in the report.
Soumya Kanti Ghosh, chief economist at SBI group was quoted in the TOI report saying it is a matter of debate whether currency in circulation implies more cash usage. “This is because there has been a decline in the velocity of money implying that fewer cash transactions are being made,” the ToI report quoted Ghosh as saying”, Ghosh said.