The total value of currency circulating in the Indian economy has nearly doubled in the six years since demonetization. The value of the whole currency has risen by 89% to £31.05.721 billion in March this year, compared to Rs.16.41.571 million in March 2016, the Treasury told Parliament today.

According to the Ministry in Lok Sabha, cash volume as measured by the number of banknotes in circulation increased by 44% to 1,30,533 million in March 2022.

Data shared by the ministry in response to a question showed that the value of banknotes in circulation fell by 20% from £16.41,571 million in March 2016 to £13,10,193 million in March 2017 – around five months since November 8, 2016 when Prime Minister Narendra Modi announced the demonetization of the Rs 500 and Rs 1000 banknotes.

However, in the next year to March 2018, it experienced a meteoric year-on-year increase, rising 37.67% to Rs 18,03,709 crore. Since then, the value of the currency in circulation in the economy has been steadily increasing.

“Demand for currency depends on several macroeconomic factors, including economic growth and interest rate levels,” the ministry said in response.

The government’s mission is to move toward a less cashless economy to reduce black money generation and circulation and promote the digital economy.

Regarding the steps taken by the government to encourage digital payments in the economy, the ministry said in response: “By the Finance Act (No. 2) 2019, the Section was inserted into the Income Tax Act 1961 to provide for any person who a Conducts business, in addition to the facility for other electronic payment methods, if any, provided by that person, must provide the facility to accept payment through the prescribed electronic methods if their total sales, turnover, or gross receipts are in the business in the immediately preceding year exceeded 50 million rupees.”

“In addition to the above, the Payment and Settlement Systems Act 2007 was also amended to prevent banks or system providers from charging, directly or indirectly, for the use of prescribed electronic payment methods under Section 269SU of the Act,” the department said.