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Hording from political party causes growing cash in economy : SBI

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Hording from political party causes growing cash in economy : SBI
Image source : Livemint

The recent RBI data shows that by this year February the cash in the economy was same as before demonetisation. The cash amount in the economy as on 23 Feb-2018 was 17.82 lakh crore which was 17.97 in November 2016. Now State bank of India comes with the statement saying that  “due to hoarding from the political party the amount of cash is increasing in the economy”.

At the time election, the currency circulation gets increased.

As per the TOI report, the issue of cash with the public going up due to elections was first officially acknowledged by former Reserve Bank of India governor Raghuram Rajan in April 2016. “Around election time, cash with the public does normally increase… You can guess as to reasons why, we can also guess,” Rajan had said.

In the same report, SBI chief economist Soumya Kanti Ghosh said, the currency in circulation has increased rapidly in the past two months. On a monthly basis, growth has been 0.45 lakh crore and 0.51 lakh crore in January and February respectively, compared to an average of 0.1 lakh crore and 0.2 lakh crore respectively in these two months in previous years

The digital transaction has come down

The digital transaction has come down drastically in the month of February. As per the financial express report by the 1st week of March the mobile wallet transaction has come down to 40-45 %.

In a country of 125 crores, where many people do not understand digital transaction it is expected that complete digital economy cannot take place.