Cash back to pre-note ban levels in India
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The Reserve Bank of India’s most recent data on the amount of cash in circulationThe value (or number of units) of the banknotes and coins in circulation within an economy. Cash in circulation is included in the M1 monetary aggregate and comprises only the banknotes and coins in circulation outside the Monetary Financial Institutions (MFI), as stated in the consolidated balance sheet of the MFIs, which means that the cash issued and held by the MFIs has been subtracted (“cash reserves”). Cash in circulation does not include the balance of the central bank’s own banknot... More (March 9), shows that cashMoney in physical form such as banknotes and coins. More usage is up to pre-demonetisation levels. Indeed, significant growth was experienced since the beginning of January demonstrating that, although digital paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More methods were largely adopted for the period immediately following the note ban, people are steadily reverting to tangible moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More.
Digital payments supporters believe it’s too soon to say whether this “comeback” is due to people’s preference for cash. They believe other reasons are involved such as this year being an election year (election funding is heavily cash-based); because rural economies are experiencing a revival (also heavily cash-based) or for the simple reason that digital payments haven’t been able to convince the Indian population.
In a traditionally cash based society like India, demonetisationSee Demonetised banknote. More came as a generalised electrocution: and the repercussions have been devastating, particularly for the poor and the informal economy – accounting for 25% to 70% of the India’s GDP.
It remains to be seen what the culprit for this surge is, but many signs point to a simple preference for the most tangible and easy-to-use payment methodSee Payment instrument. More: cash.
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