5 years after demonetization, despite the rise in digital payments, the number of notes in circulation increases steadily. However, the pace of growth is slow. Actually, during the Covid-19 epidemic, people thought it better to keep cash as a precaution. Due to this, the banknotes in circulation increased during the last financial year.
According to official data, there has also been a significant increase in digital payments through mediums like debit/credit cards, net banking, and Unified Payments Interface (UPI). UPI of the National Payments Corporation of India (NPCI) is fast emerging as a significant mode of payment in the country. Despite all this, the increase of notes in circulation is slow but continues.
5 years ago, on November 8, 2016, Prime Minister Narendra Modi announced demonetization. There was a ban on1000 and 500 notes from midnight. After this, new 500 and 2000 notes were issued. Its main objective was to promote digital payments and curb black money.
Why demonetization happened: At that time, the government had given 5 significant objectives of demonetization. This big step was taken by the government to eliminate black money. Also, to make the country cashless, curb black money, eliminate fake currency, and break the back of terrorists and Naxalites.
Notes circulation increased after demonetization. According to the latest RBI data, notes worth Rs 17.74 lakh crore were in circulation as of November 4, 2016. It increased to Rs 29.17 lakh crore on October 29, 2021.
According to RBI, the value of notes in circulation as of October 30, 2020, was Rs 26.88 lakh. It has increased to Rs 2,28,963 crore till October 29, 2021. On the same year-on-year basis, it increased by Rs 4,57,059 crore on October 30, 2020, and Rs 2,84,451 crore on November 1, 2019, a year ago.