7 years of demonetisation, and cash remains king!
From about ₹16.63 lakh crore in FY16 before demonetisation – which then went down to ₹ 13.35 lakh crore immediately after, cash in circulation is now nearly ₹34 lakh crore.
There were various stated objectives of demonetisation- from curbing black money, and corruption to terror financing and what not. But with almost all of the demonetised currency of ₹500 and ₹1,000 notes coming back into the system and the after-thought goal was also to reduce the cash intensity of the economy. Seven years since the event- cash in circulation has more than doubled.
From about ₹16.63 lakh crore in FY16 before demonetisation – which then went down to ₹ 13.35 lakh crore immediately after, cash in circulation is now nearly ₹34 lakh crore.
Steady Rise In Cash Transactions
| Year | Value of Transaction (Rs Trillion) | YoY Growth | CIC as % of GDP |
| FY16 | 16.63 | 14.8% | 12.2% |
| FY17 | 13.35 | -19.7% | 8.7% |
| FY18 | 18.30 | 31.1% | 10.7% |
| FY19 | 21.36 | 16.7% | 11.2% |
| FY20 | 24.47 | 14.6% | 12% |
| FY21 | 28.53 | 16.6% | 14.4% |
| FY22 | 31.33 | 9.8% | 13.7% |
| FY23 | 33.78 | 7.8% | 12.7% |
#RBI Data
Even if you were to look at cash as a percentage of GDP, it has grown steadily from 8.7% after demonetisation to nearly 13% now. The last few years have seen the currency in circulation (CIC) to Gross domestic product (GDP) ratio decline, but that’s also to do with the GDP hit on the economy due to COVID-19.
Let's also take a look at the banknotes in circulation. Of the total value of the currency in circulation in India in FY23, ₹500 notes formed a massive 77.1%, and their share has only gone up since demonetisation.
The data also suggest that the recall of the ₹2,000 note might not make much of a difference currently. They were introduced after demonetisation to quickly meet currency requirements of the economy after ₹500 and ₹1,000 notes were removed overnight—and have now been withdrawn, but their share has steadily been coming down since its printing was stopped in 2018.
At the same time, India has seen a boom in digital transactions, largely thanks to UPI, which now has over 330 million unique users. It forms more than 78% of India's total retail digital payments today. Last month, UPI crossed a whopping 11.4 billion monthly transactions, setting a new record with transaction value surpassing ₹17.6 lakh crore.
RBI is also now betting on retail Central Bank Digital Currency picking up, currently clocking 15,000 daily transactions, which RBI estimates will be 1 million a day by the end of the year.
While digital is becoming a popular mode for transactions- it has hardly replaced hard cash which remains king- even seven years after demonetisation!
Share of Banknotes
| Year | Rs 50 | Rs 100 | Rs 200 | Rs 500 | Rs 2,000 |
| FY16 | 1.2 | 9.6 | - | 47.8 | - |
| FY17 | 2.7 | 19.3 | - | 22.5 | 50.2 |
| FY18 | 2 | 12.3 | 2.1 | 42.9 | 37.3 |
| FY19 | 2 | 9.5 | 3.8 | 51 | 31.2 |
| FY20 | 1.8 | 8.2 | 4.4 | 60.8 | 22.6 |
| FY21 | 1.5 | 6.7 | 4.1 | 68.4 | 17.3 |
| FY22 | 1.4 | 5.8 | 3.9 | 73.3 | 13.8 |
| FY23 | 1.3 | 5.4 | 3.7 | 77.1 | 10.8 |
#RBI Annual Report
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