Currency in circulation went up by Rs 5 lakh crore in 2020 as Indians hoarded cash amid COVID-19 lockdown
New Delhi | Jagran Business Desk: The currency in circulation (CIC) expanded by 22.1 per cent in calendar year 2021 as people hoarded cash while the nation went into a lockdown in wake of the COVID-19 pandemic. As per the data released by the Reserve Bank of India (RBI), the CIC growth was way higher than 2019's 11.8 per cent growth rate.
The data, quoted by a Times of India report, showed that the currency in circulation grew by Rs 5,01,405 crore between January 2019 and January 2020. Overall, it has gone up to Rs 27,70,315 crore, up 22 per cent from the previous year.
If the post-demonetisation surge due to replcament of bankotes is not taken into account, then this is the sharpest increase in currency in circulation till date.
The growth in CIC does not come as a surprise given the fact that in the first four months of the calendar, incremental CIC was higher than the entire calendar year of 2019. The increase in currency in circulation between January and May 1 was Rs 2.66 trillion. In comparison, it increased by Rs 2.40 trillion in the entire 2019 (January to December).
The currency in circulation shrunk by nearly 20 per cent in FY17 due to demonetisation while it jumped 37 per cent in FY18 when the new banknotes were issued. The average growth for the last decade was 12.6 per cent and for the last 50 years 13.8 per cent.
The uncertainity brought by the pandemic drove people to hoard more cash over fears of medical or financial emergency. While CIC does rise with the increase in GDP, a recent paper published by RBI staff said high growth in currency during the last three years was despite low nominal GDP growth.
Posted By: Abhinav Gupta