New Delhi: The cash in circulation has more than doubled between March 2017 and March 2024, despite the withdrawal of Rs 2,000 denomination banknotes from circulation, according to HSBC PMI and CMS cash index.
These two indices, as per The Economic Times, have moved in tandem showing both cash and digital payments have witnessed a growth. The indices showed the importance of cash in circulation.
The cash in circulation increased from Rs 13.35 lakh crore in March 2017 to Rs 35.15 lakh crore at the end of March 2024, the business daily reported.
In November 2016, Prime Minister Narendra Modi had announced a ban on Rs 500 and Rs 1,000 notes. This was followed by the introduction of a Rs 2,000 note, which, as mentioned earlier, was withdrawn in May 2023.
Further, the report underlined that digital payments through UPI, launched in 2016, have scaled only after the COVID-19 pandemic in 2020 and have gone up almost nine times. The value of monthly UPI transactions increased from Rs 2.06 lakh crore in March 2020 to Rs 18.07 lakh crore in February 2024.
The Reserve Bank of India’s assessments on currency in circulation highlights that currency demand often tends to be higher during festivals and prior to big elections, or in a year in which the agricultural sector clocks a strong growth as it props cash demand from rural areas, the report noted.
Interestingly, the CMS Info System’s CMS cash index — which offers cash management and other business services — has trended in line with the HSBC Purchase Manager’s Index.
While the CMS cash index stood at 100 in April 2017 and went up to 125.6 in March 2024, the HSBC PMI increased from 100 to 117 in the same period, as per the report.
The CMS Info Systems’ Consumption Report 2024 – ‘Unfolding India’s Consumption Story 2024’ – highlighted that “spends are increasing in consumer durables and FMCG sector and also for travel and entertainment and topped growth in FY’24,” ET reported.
The states with the highest growth in ATM withdrawals for spends in FY24 are Delhi, Tamil Nadu, Uttar Pradesh, West Bengal, and Karnataka, as per the report.
