Notes in Circulation Increased to 130.5bn Pieces; Value Increased 9.86% to Rs31.05 Lakh Crore: Govt

Moneylife Digital Team 19 December 2022

While reiterating that the demand for currency depends on several macro-economic factors, including economic growth and level of interest rates, the Union government told the Lok Sabha that, as of March 2022, there were over 130.53bn (billion) notes in circulation valued at Rs31.05 lakh crore. This is an increase of 9.86% over a value of Rs25.27 lakh crore recorded in 2021.

A written reply given by finance minister Nirmala Sitharaman shows that, as of 31 March 2016, there were 90,266mn (about 90.27bn) pieces of notes with a value of Rs16.41 lakh crore in circulation. This was before demonetisation was announced on 8 November 2016.

Demonetisation of old Rs1,000 and Rs500 notes was premised on the incorrect notion that `black means cash'. When demonetisation was announced on 8 November 2016, Rs15,41,793 crore worth of withdrawn notes were in circulation. Last year in December, the finance ministry told the Rajya Sabha that, after verification and reconciliation, as of 30 June 2018, Rs15,31,073 crore worth of notes returned from circulation.

As per the reply given by Ms Sitharaman to a question asked by P Velusamy, a member of Parliament (MP), as of 31 March 2017 (four months after the demonetisation), the number of currency notes in circulation increased 11.11% to 100.29bn with the value falling by 20.18% to Rs13.10 lakh crore from the previous year.

The volume of currency notes in circulation jumped 44% to 130.53bn in March 2022 from 90.27bn as of March 2016. During the same period, the value of currency in circulation increased 89.91% to Rs31.05 lakh crore.

As of 2 December 2022, notes worth Rs31.92 lakh crore were in circulation. This is an increase of 7.98% compared with the value of notes in circulation worth Rs29.56 lakh crore as of 3 December 2021, the finance minister says.

Mr Velusamy, the MP, also asked about steps taken by the government to improve the digital payment mechanism without any hidden service charges levied by the service-providers.

Ms Sitharaman, the finance minister, informed the lower house that RBI issued a circular on 6 December 2017 on the rationalisation of merchant discount rate (MDR) for debit card transactions, which advised banks to ensure that merchants on-boarded by them do not pass the MDR (merchant discount rate) charges to customers.

"In terms of RBI circular dated 17 March 2020 on 'guidelines on regulation of payment aggregators and payment gateways', payment aggregators (PAs) shall ensure that the extant instructions with regard to MDR are followed, and that information on other charges such as convenience fee, handling fee, etc., if any, being levied shall also be displayed upfront by the PA," the finance minister says.

Comments