The currency in circulation has jumped a whopping 20.14 per cent to scale Rs 21.59 lakh crore, show the latest Reserve Bank data released on Friday, which is the third anniversary of the controversial note-ban. Reducing the cash dependency in the economy by making people use alternatives like digital payments was one of the stated motives of the decision to cancel as much as 87.6 percent of the currency in circulation on November 8, 2016.
The badly implemented decision led to many people losing their lives while standing in serpentine queues to withdraw money or deposit the banned currency bills, and crippled the economy. On November 8, 2016, the government and RBI pulled out Rs 500 and Rs 1,000 denomination notes from the system in a surprise move. Unsuspecting people deposited virtually the entire stock of the banned notes with banks, putting a big question marks over the efficacy of the exercise.
The RBI data on Friday showed the currency with the public grew 15.2 per cent to Rs 21.59 lakh crore as of the fortnight to October 25, as against Rs 17.97 lakh crore on November 4, 2016. However, the growth of currency in circulation seems to be slowing down as it had grown 21.1 percent in the last year over the previous year.
According to the RBI data, there has been a 5.2 percent addition to the cash economy with the public between April 1 and October 25, 2019, which is slower compared to 6.6 percent growth a year ago.
Apart from prodding the people to move to digital which would have helped arrest the growth of black money, the original move was also aimed at curbing fake currency apart from restricting insurgency activities. After falling massively post-demonetisation by nearly Rs 10 lakh crore, the currency in circulation has recouped at a faster pace, and it took over 16 months for the levels to go back to the pre-demonetisation levels. Digital payments have grown manifold over time and the UPI volumes hit 1 billion transactions-mark in a single month of October.