Cash in circulation at a decadal high even as digital payments soar

From 12% of the GDP in FY16, currency usage slumped to 8% in FY17 following demonetisation, and has been gradually rising since.

Synopsis

Experts attributed higher cash storage to various factors: Withdrawal of benefit payouts and subsidies from Jan Dhan accounts, better agriculture output and farm-gate receipts, and even a statistical base effect. To be sure, the economy as a whole is expected to have either contracted or remained unchanged through FY21 after the record first-quarter shrinkage.

At nearly a sixth of the gross domestic product (GDP), currency in circulation is at its highest in a decade, pointing to the likelihood of cash storage in anticipation of medical emergencies, even as much of India is shut down and mobility curbs imposed to prevent the coronavirus from spreading.

Simultaneously, digital modes of payment have also soared manifold since the demonetisation in late 2016 , underscoring the apparent dichotomy in

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