Currency with Public at Rs. 30.89 lakh Crore – Higher than before Demonetization

Currency with public refers to notes and coins used by people to transact, settle trades, and for buying goods and services. The figure comes after subtracting cash with banks from currency in circulation.

Currency/ Cash with public in 21st October, 2022, was at Rs. 30.89 lakh crore. This is 81.55% higher compared to 28th October, 2016 and 71.83% higher than the level for the fortnight ended November 4, 2016. Remember, the Demonetization was announced on 8th November, 2016.

Components

21st October, 2022

28th October, 2016

4th November, 2016

Currency with the Public

3088931.93

1701380.86

1797700.00

% increase

 

81.55

71.83

Source: Data on Money Supply, DBIE weekly, Reserve Bank of India.

The Government stated three major reasons for demonetization. They are i) Fake Currency/ Counterfeit notes ii) Black Money and iii) Creating cashless economy by pushing digital transactions.

There are still more questions about existence of Black money. When it comes to Counterfeit Notes Reserve Bank of India in its Annual Report mentioned that Fake Currency has increased in RBI from 4.6% in 2019-20 to 6.9% in 2021-22 compared to detection at other Banks has reduced from 95.4% in 2019-20 to 93.1% 2021-22.

The following are in words from RBI Annual Report:

“During 2021-22, out of the total Fake Indian Currency Notes (FICNs) detected in the banking sector, 6.9 per cent were detected at the Reserve Bank and 93.1 per cent at other banks.

Compared to the previous year, there was an increase of 16.4 per cent, 16.5 per cent, 11.7 per cent, 101.9 per cent and 54.6 per cent in the counterfeit notes detected in the denominations of ₹10, ₹20, ₹200, ₹500 (new design) and ₹2000, respectively. The counterfeit notes detected in the denominations of ₹50 and ₹100 declined by 28.7 per cent and 16.7 per cent, respectively.”

Number of Counterfeit Notes Detected (April to March)

(Number of pieces)

Year

Detection at Reserve Bank

Detection at Other Banks

Total

1

2

3

4

2019-20

13,530

2,83,165

2,96,695

 

(4.6)

(95.4)

(100.0)

2020-21

8,107

2,00,518

2,08,625

 

(3.9)

(96.1)

(100.0)

2021-22

15,878

2,15,093

2,30,971

 

(6.9)

(93.1)

(100.0)

Note:

 

1. Figures in parentheses represent the percentage share in total.

2. Does not include counterfeit notes seized by the police and other enforcement agencies.

Source: RBI.

 

Denomination-wise Counterfeit Notes Detected in the Banking System
(April to March)

(Number of pieces)

Denomination (₹)

2019-20

2020-21

2021-22

1

2

3

4

2 and 5

22

9

1

10

844

304

354

20

510

267

311

50

47,454

24,802

17,696

100

1,68,739

1,10,736

92,237

200

31,969

24,245

27,074

500 (Specified Banknotes)

11

9

14

500

30,054

39,453

79,669

1000 (Specified Banknotes)

72

2

11

2000

17,020

8,798

13,604

Total

2,96,695

2,08,625

2,30,971

Source: RBI.

According to National Payment Corporation of India (NPCI) as on October, 2022, Unified Payment Interface (UPI) has touched a new high of Rs. 12.11 lakh Core. It has crossed the milestone of Rs. 10 lakh crore in May, 2022.  

There are still lot of debates and questions about Demonetization and its effects. But, there are views say that currency with public may have increased due to more availability of lower denominations (i.e. only Rs. 100, Rs. 500 notes – nowadays one can hardly see Rs. 2000 notes in circulation) than the higher denominations. Whatever the case, the cash with public has increased over the years and thus creating Monetary Inflation.