6yrs of DeMon demon: Jury still out on noteban efficacy
Currency In Circulation (CIC) in payment systems has been declining from 88% in FY16 to 20% in FY22 and is estimated to go down further to 11.15% in 2026-27: SBI
image for illustrative purpose
Re-Monetisation
- Modi sarkar withdrew Rs500 and Rs1,000 notes on Nov 8, 2016
- It introduced new Rs2,000 and Rs500 series currency notes
- Later, a new denomination of Rs 200 was also added
- In value terms, the share of Rs500 and Rs2,000 banknotes accounted for 85.7% of the total value of banknotes in circulation as on March 31, 2021, as against 83.4% as on March 31, 2020
New Delhi: The jury is still out on the efficacy of the decision to demonetise high value currency notes on November 8, 2016, with the government claiming it has helped greater formalisation of the economy, while critics saying it has failed to curb black money and reduce dependence on cash. Six years ago, on November 8, 2016, Prime Minister Narendra Modi announced the demonetisation of old Rs1,000 and Rs500 banknotes and one of the key objectives of the unprecedented decision was to promote digital payments and curb black money, besides eliminating terror funding. As per a Reserve Bank of India (RBI) data, currency with the public has jumped to a new high of Rs30.88 lakh crore an October 21, indicating that cash usage is still substantial even six years after the demonetisation move.
At Rs30.88 lakh crore, the currency with the public is 71.84 per cent higher than the level for the fortnight ended November 4, 2016. On November 8, 2016, Prime Minister Narendra Modi had announced the decision to withdraw Rs500 and Rs1,000 denomination notes with the ultimate aim of reducing corruption and black money in the economy.
The State Bank of India (SBI) in a research report said the share of Currency In Circulation (CIC) in payment systems has been declining from 88 per cent in fiscal 2015-16 to 20 per cent in 2021-22 and is estimated to go down further to 11.15 per cent in 2026-27.
Consequently, the digital transactions' share is continuously increasing from 11.26 per cent in 2015-16 to 80.4 per cent in 2021-22 and is expected to touch 88 per cent in 2026-27, SBI report had said.
Criticising the Modi government's demonetisation decision, Congress president Mallikarjun Kharge in a tweet said demonetisation was promised to free the country of black money.
