Updated: June 7, 2021 7:33:02 am
As Covid numbers continued to remain at elevated levels in the fortnight ended May 21 and the dependence upon cash rose amid the uncertainty surrounding medical emergency and for general household expenditure, currency with public rose to a new high of Rs 28,62,466 crore.
According to the data released by the Reserve Bank of India (RBI) on Friday, currency with public rose by Rs 23,145 crore in the fortnight ended May 21. In the two-month period between March 27 and May 21, as cases rose and stayed at elevated levels, cash holdings with public jumped over Rs 1 lakh crore. As on March 26, 2021, currency with public amounted to Rs 27,57,750 crore.
May witnessed spike in cash holdings as fresh cases and mortality jumped to record highs.
In the one-month period between April 23 and May 21 (two fortnights), cash holdings with public witnessed the biggest monthly spike in the last 12 months, as it amounted to Rs 58,606 crore.
Last year, in the one-month period between April 25 and May 22, currency with public rose by Rs 88,027 crore.
Economists and bankers say since a rise in uncertainty leads to a jump in cash holding, the sharp rise in cases from around 1 lakh in the first week of April to upwards of 4 lakh in the first week of May had a direct bearing on people’s behaviour. The rise in Covid cases raised apprehensions around the imposition of a stringent lockdown by Central or state governments and that led people to withdraw cash from their bank accounts.
Also, widespread Covid cases and high medical expenditure involved in Covid treatment forced people to withdraw cash in order to meet any urgent cash requirements in case of a health emergency.
Some feel that the economic distress at individual level — income disruption, loss of job and small businesses shutting down during lockdown — has also forced people to dip into their savings in bank to meet their monthly expense and that also led to a rise in cash holding.
While the currency with public has been rising over the last 15 months since the pandemic broke, its pace slowed after July 2020, in line with decline of cases. It, however, gathered momentum in February 2021 as the cases started rising again.
Currency with public has risen significantly over the last few years.
Since the government announced demonetisation on November 8, 2016, the currency with public has risen by Rs 10.65 lakh crore, or 59.3 per cent. As on November 4, 2016, currency with public stood at Rs 17.97 lakh crore.
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