New Delhi: The share of currency in circulation (CIC) to the gross domestic product in India registered a considerable growth of nearly 15 per cent in 2021 as against the 8.7 per cent in 2016-17, according to the data presented in the Parliament by the Finance Ministry.
The CIC to GDP ratio is expected to further go up in fiscal 2021 despite the pandemic induced economic hurdles and the increased transactions through digital modes.
The present CIC to GDP ratio is said to be ever higher than that in the pre-pandemic time. Meanwhile, the currency in circulation has declined to 7.9 per cent (Rs 2.14 lakh crore) in November 2021 from 22.2 per cent (over Rs 5 crore) growth in the same month a year ago.
The Finance Ministry report linked the CIC growth to the increased demand of cash during the pandemic time.
Despite the Union government's measures to curb currency usage by pushing for a "less-cash society" through the digitisation of payments, the cash flows have marked a steady rise. Contrary to the Centre's claim that the demonetisation could help reduce cash in hand with public, the currency usage only increased since then.
As per the RBI's definition, currency with the public is arrived at after deducting cash from banks from total CiC. CIC refers to cash or currency within a country that is physically used to conduct transactions between consumers and businesses.