MUMBAI: The ratio of currency in circulation as
a proportion of GDP touched a new high of
14.5% for fiscal 2020-21. The surge came as the
pandemic increased the demand for cash and shrunk the GDP.
At the same time, the surge in every form of
digital payments continues on the fifth
anniversary of demonetisation — whether it is
Unified Payments Interface
(UPI), credit and debit cards or FASTag —
demonstrating that the shift to digital as well as
cash intensity are not mutually exclusive.
The post-pandemic increase in currency in
circulation has been a global phenomenon,
described as a ‘dash to cash’ under extreme
uncertainty. This has been experienced by the
US, Spain, Italy, Germany, France, Brazil, Russia and Turkey.
Meanwhile, digital payments are nearly three
times what they were in FY18. The Reserve Bank
of India’s digital payments index, which has 2018
as the base year at 100, has risen to 270. This
index also captures the spread of digital, taking
into account growth in the payments
infrastructure.