Modi's digital economy? Covid has upped cash use

November 09, 2021 13:29

Uncertainties on account of COVID-19 pandemic have increased the demand for currency notes not only in India but across the globe, official sources said, dismissing the criticism that demonetisation has failed to reduce cash in the economy.

Government sources said that growth of the digital payments system post-demonetisation will ultimately curb the dependence on cash.

Official data points out a jump in digital payments through different modes, including plastic cards, net banking and Unified Payments Interface (UPI). UPI of the National Payments Corporation of India (NPCI) is fast emerging as a major medium of payment in the country.

UPI was launched in 2016, and the transactions have been growing month-on-month barring a few blips.

In October 2021, the transactions in value terms stood at over Rs 7.71 lakh crore or over USD 100 billion. A total of 421 crore transactions were done through UPI in October.

Sources also pointed out that even in the US, total currency in circulation soared to USD 2.07 trillion by the end of 2020 - a 16 per cent gain from a year earlier, and was also the biggest one-year percentage increase since 1945.

Demand for liquidity always increases during periods of economic uncertainty and since cash is the most liquid form of asset, the increase in cash during the period of enormous uncertainty is expected, sources said, adding, the larger holding of cash in the pandemic year has been a world-wide phenomenon.

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