Rise in currency in circulation slows

India’s currency in circulation has increased by only around 500 billion rupees in the first four months of this financial year that began in April, which is nearly half the pace of the same period a year ago.

“Economic activity is completely back to pre-pandemic levels, and hence there is hardly any need for panic-driven cash withdrawals, which is leading to a drop in cash in circulation,” a trader with a state-run bank said.

The rise in the cash in circulation for April-July stood at 508 billion rupees ($6.38 billion), as compared to 928 billion rupees for the similar period last year and a mammoth 2.25 trillion rupees in 2020-21, the peak of lockdown, data from the Reserve Bank of India showed.

The currency in circulation had jumped by over four trillion rupees in 2020-21, while the increase tapered to 2.80 trillion rupees in the last financial year, and market participants expect another drop in the current year.