RBI will also bring out a Rs 100 coin for commemorative purpose only, according to a notification in the government gazette. This will be the second time it is coming out with a Rs 100 coin
The government is likely to print less currency as it wants to push digital payments in a big way. The currency in circulation (CIC) fell for the second consecutive week, down by Rs 417 crore to Rs 15.65 lakh crore, according to the latest available data from the Reserve Bank of India (RBI).
Just before the demonetization in November last year, the total currency in circulation was Rs 17.97 lakh crore.
The CIC stands at 10.49% of 2016-17 nominal gross domestic product (GDP) compared to around 12% prior to demonetization, according to an analysis undertaken by Kotak Economic Research.
In another development, RBI will also bring out a Rs 100 coin for commemorative purpose only, according to a notification in the government gazette. This will be the second time it is coming out with a Rs 100 coin.
Soumya Kanti Ghosh, who heads SBI Economic Research, said, “I think RBI is printing less number of notes. Earlier, they were printing currency in three shifts and now only in two shifts. But I don’t think the currency in circulation will go to the pre-demonetization levels as the focus is now on the digital payments."
All the modes of digital payments like the unified payments interface, the Bharat QR Code and the Bharat Interface for Money (BHIM) will be used by all government public utilities like buses, railways, water and electricity departments. Even at post offices, there are special counters for digital payments.
On November 8, 2016, currency notes of denominations of Rs 1,000 and Rs 500, valued at Rs 15.4 lakh crore and constituting 86.9% of the value of total notes in circulation, were demonetized. At present, the newly-supplied currency is 84% of the extinguished currency (as on June 2017).
However, CIC may witness some rise in the short-term. “We expect the CIC to increase during following two weeks due to increase cash demand usually seen in the beginning of the month,” said Upasana Bhardwaj, economist at Kotak Economic Research, in a report.
Besides the currency in circulation, the liquidity in the banking system is also draining out due to tax outflows and auction-related outflows. The average liquidity surplus, however, stood at Rs 2.90 lakh crore for the week ended September 8, compared to Rs 2.75 lakh crore for the week ended September 1, given a much lower surplus witnessed in the early part of the week ending September 1.
“We expect liquidity surplus to tighten further this week on the back of advance tax outflows, OMO (open market operations) sale and heavy auctions of G-Sec, SDL (state development loans) and T-Bills against limited inflows,” Bhardwaj said in the report.
RS 100 COIN COMING
- RBI will bring out a Rs 100 coin for commemorative purpose only, according to a notification in the government gazette. This will be the second time it is coming out with a Rs 100 coin.
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