After a long-long time, the Indian economy is managing with less cash. That is what the Reserve Bank of India (RBI) annual report for 2016-17 reveals.
The bank notes in circulation have declined by little over 20 per cent from Rs 16.41 lakh crore a year ago to Rs 13.10 lakh crore. This may be seen as a huge benefit if it stays at that level in future. The benefits are in the form of lower cost of printing notes , distribution and logistics costs and the use of digital payments.
The bank notes in circulation were on the rise in the domestic economy. Take for example, the bank note in circles circulation increased by 15 per cent in 2015-16. Similarly. Bank notes increased by 11 per cent in 2014-15. It reached the level of over 16 lakh crore just before the demonetization of high value currency of Rs 1,000 and Rs 500 was announced on November 08,2016. Theses notes constituted almost 86 er cent of the total value of currency in circulation.
Experts, however, say it is too early to say that India can manage with less cash. It could be because of the slow progress of remonetisation. If economy needs more cash ,the release of less cash would choke the economy.
In fact, the less cash in circulation is not a gain for digital as of now. Currently ,the total retail payments and settlements in the economy is still 10 perent of the total payments and settlement in the economy. The share of debit card , credit card and prepaid instrument is still less than 3 er cent.