The resilience of cash in a crisis has been evident during the corona pandemic. Across the world, countries and regions – from the United States to Canada, New Zealand, Mexico, the UK or Europe – have seen an increase in the demand for cash.
Now they are being joined by the Reserve Bank of India: cash in circulation in the country has risen by 10% following the lockdown measures. According to The Times of India “currency in circulation has risen to 26.9 lakh crore - a hike of 10% - since the lockdown began” since 20th March this year.
The currency in circulation has increased to a staggering Rs 2.66 trillion ($3.62 trillion/3.04 trillion) between January and May 1st 2020. In comparison, “it increased by Rs 2.40 trillion in the entire 2019” period.
In their annual report for 2019-20, the RBI has confirmed that the ratio of currency to GDP has increased to 12%, which equals pre-demonetisation levels.
Despite the demonetisation in 2016, cash in India has grown year on year, with a new peak now during covid-19. Cash continues to reign in India:
“The preference for cash has seen year-on-year growth in currency held with the public (CwP) accelerating from 11.3% as on February 28 2020, to 14.5% at end-March and to 21.3% by June.”