New Delhi: Demonetisation of the high value currency notes of Rs 500 and Rs 1,000 did not have any discernible impact on currency in circulation (CIC) in the country, which has soared by almost 83 per cent since its announcement on November 8, 2016.
The Supreme Court on Monday upheld the decision of the government on demonetisation.
On November 8, 2016 Prime Minister Narendra Modi had announced demonetisation of old Rs 1,000 and Rs 500 banknotes and one of the key objectives of the unprecedented decision was to promote digital payments and curb black money flows.
According to the Reserve Bank data, the CIC in value terms soared from Rs 17.74 lakh crore on November 4, 2016, to Rs 32.42 lakh crore on December 23, 2022.
However, soon after demonetisation, the CIC fell precipitously to a low of about Rs 9 lakh crore on January 6, 2017, nearly 50 per cent of Rs 17.74 lakh crore on November 4, 2016.
This was the lowest in the past six years following the scrapping of old 500/1,000 bank notes that accounted for around 86 per cent of the total notes at that time.
Compared with January 6, 2017 the CIC has seen more than 3-fold or 260 per cent jump, while from November 4, 2016 it has seen about 83 per cent jump.
As remonetisation gathered pace, CIC moved up week after week and reached 74.3 per cent of the peak by the end of the financial year.
Subsequently around 85 per cent of its pre-demonetisation peak at the end of June 2017.
Demonetisation led to a decline in CIC by about Rs 8,99,700 crore (up to January 6, 2017) resulted in a large increase in surplus liquidity with the banking system, equivalent to a cut in the Cash Reserve Ratio (percentage of deposits parked with the RBI) by about 9 per cent.