{"id":132399,"date":"2026-11-10T12:23:15","date_gmt":"2026-11-10T06:53:15","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=132399"},"modified":"2026-11-10T12:23:15","modified_gmt":"2026-11-10T06:53:15","slug":"cash-after-demonetisation-why-physical-currency-still-reigns-in-india","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/cash-after-demonetisation-why-physical-currency-still-reigns-in-india\/","title":{"rendered":"Cash After Demonetisation: Why Physical Currency Still Reigns in India"},"content":{"rendered":"<h2><b>Cash After Demonetisation Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">November 8, 2026 marked ten years since PM Modi\u2019s dramatic televised announcement demonetising \u20b9500 and \u20b91,000 notes, aimed at curbing black money, counterfeit currency, and pushing India toward a cashless economy.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A decade later, RBI data reveals a striking paradox: despite a massive digital payments boom, currency held by the public has more than doubled since demonetisation \u2014 raising questions about whether the note ban achieved its core objective.<\/span><\/li>\n<\/ul>\n<h2><b>The Big Announcement and Immediate Impact<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">On November 8, 2016, at 8 PM, PM Modi declared existing \u20b9500 and \u20b91,000 notes invalid from midnight \u2014 denominations that made up ~86% of currency in circulation.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The sudden cash crunch disrupted shops, businesses, and households nationwide; people queued for hours at banks and ATMs.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>GDP growth declined<\/b><span style=\"font-weight: 400;\"> by nearly 1.5 percentage points; many small businesses shut down due to liquidity shortages.<\/span><\/li>\n<\/ul>\n<h2><b>The Long-Term Currency Trend<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Currency with the public stood at <\/span><b>\u20b917.97 lakh crore<\/b><span style=\"font-weight: 400;\"> (November 4, 2016), crashed to \u20b97.8 lakh crore by January 2017, but has since surged to <\/span><b>\u20b942.55 lakh crore<\/b><span style=\"font-weight: 400;\"> (as of October 15, 2026) \u2014 a 137% increase over pre-demonetisation levels.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Currency with the public = Currency in Circulation (CIC) minus cash held by banks.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In calendar year 2026 alone (till October 16), cash with the public rose by \u20b95.26 lakh crore (14.1%).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A sharp spike occurred in 2020-21, driven by pandemic-induced cash hoarding for groceries and medical expenses during the Covid-19 lockdown.<\/span><\/li>\n<\/ul>\n<h2><b>Currency-to-GDP Ratio: A Mixed Signal<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>CIC-to-GDP ratio rose<\/b><span style=\"font-weight: 400;\"> from 8.7% (2016-17) to 14.4% (2020-21), before settling at 12.1% in FY26 \u2014 nearly identical to March 2016\u2019s 12.1%.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Global Comparison<\/b><span style=\"font-weight: 400;\">: Japan (16%+), China (10.2%), US (7.3%) \u2014 India\u2019s ratio is higher than the US and China but lower than Japan.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A higher ratio indicates greater cash dependence; a lower ratio typically reflects stronger digitalisation and better monetary policy transmission.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Importantly, a high ratio doesn\u2019t necessarily signal lower economic sophistication.<\/span><\/li>\n<\/ul>\n<h2><b>Cash vs Digital: Coexistence, Not Replacement<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Despite RBI and government efforts toward a \u201cless-cash society\u201d, cash usage has not declined \u2014 it has grown alongside digital payments.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Total digital payments (FY2025-26): \u20b93,251.04 lakh crore (covering RTGS, retail transfers, cards, and prepaid instruments).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Card and wallet transactions (FY2025-26): ~151,611 lakh transactions worth \u20b930.31 lakh crore.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Credit cards: \u20b923.62 lakh crore (60,238 lakh transactions) \u2014 dominant by value.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Debit cards: \u20b94.45 lakh crore (12,802 lakh transactions).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Wallets: \u20b92.23 lakh crore, but highest transaction volume (78,571 lakh) \u2014 used for frequent, low-value payments.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Comparison with FY2015-16: just 1,003.87 crore card transactions worth \u20b929.39 lakh crore (debit cards dominant then).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">By value share in FY26: Credit cards (78%), Debit cards (14.7%), Wallets (7.4%).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">By volume share: Wallets (51.8%), Credit cards (39.7%), Debit cards (8.4%).<\/span><\/li>\n<\/ul>\n<h2><b>Conclusion<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A decade on, demonetisation\u2019s cashless dream remains unrealised \u2014 cash and digital payments now coexist rather than compete.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India\u2019s economy has formalised and digitised significantly, yet physical currency continues circulating robustly, proving that convenience, trust, and habit still make cash resilient in a rapidly digitalising nation.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/10-years-demonetisation-india-cash-currency-gdp-digital-payments-10956081\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Cash after demonetisation has continued to grow despite digital payments. Explore currency trends, the cash-to-GDP ratio and India&#8217;s changing payment habits.<\/p>\n","protected":false},"author":18,"featured_media":132417,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[11399,60,22,59],"class_list":["post-132399","post","type-post","status-publish","format-standard","has-post-thumbnail","category-upsc-mains-current-affairs","tag-cash-after-demonetisation","tag-mains-articles","tag-upsc-current-affairs","tag-upsc-mains-current-affairs","no-featured-image-padding"],"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/132399","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=132399"}],"version-history":[{"count":5,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/132399\/revisions"}],"predecessor-version":[{"id":132449,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/132399\/revisions\/132449"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/132417"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=132399"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=132399"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=132399"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}