The Currency in Circulation (CiC) grew by around 13 per cent in the first nine months of the current fiscal as people preferred holding on to cash as a precautionary measure amid the uncertainty caused due to the COVID-19 pandemic.
CiC grew by Rs 3,23,003 crore, or 13.2 per cent, to Rs 27,70,315 crore as on January 1, 2021 from Rs 24,47,312 crore as on March 31, 2020, according to recent data released by the Reserve Bank of India (RBI).
In the April-December period of FY2020, it had grown by nearly 6 per cent.
According to Care Ratings Chief Economist Madan Sabnavis, the growth in currency in circulation so far in the current fiscal has been high as people were accumulating more cash to meet any exigency during the lockdown.
“Whenever there is a crisis-like situation, there is a tendency for households to latch on to cash. That is the reason there has been an increase in demand for cash. What you see is nothing else but a precautionary motive overwhelming everything,” Sabnavis said.
The RBI in its annual report for 2019-20, released in August