Indians' love for physical currency remains intact
After 5 yrs of demonetisation, cash in circulation at 13.1% of GDP now from 8.7% after noteban in 2016, lower from 14.5% in FY21: Report
image for illustrative purpose
Mumbai: Despite the overall increase in the formalisation of the economy in the past five-six years, the key component of an informal economy -- cash in circulation (CIC) as a percentage of GDP -- has continued to rise year after year, barring in the year of note ban in 2016, when it fell to 8.7 per cent, according to a report.
According to the report by SBI Research, almost 80 per cent of the economy has been formalised in the past five years with every aspect of the non-cash component of the economy including agri credit, gaining traction. In a detailed report on Monday, SBI Research said that after dipping to 8.7 per cent of GDP in 2016 (after the note-ban), cash in circulation (CIC) as a percentage of GDP has climbed again to 13.1 per cent so far this fiscal. It is only marginally down from the peak of 14.5 per cent in FY21, which could be because of the pandemic-driven sense of insecurity and uncertainties. During FY08-FY10, when the economy was on a scorching growth rate, sniffing at almost double-digits growth, the CIC trended at 12.1, 12.5 and 12.4 per cent, respectively.
The same trend continued with minor variations in the next five years also peaking at 12.4 per cent in FY11 and falling to 11.4 per cent in FY15, according to the SBI report pencilled by Soumya Kanti Ghosh, its group chief economic adviser.
