India’s cash in circulation falls by half this year

India's currency in circulation has increased by only around 500 billion in the first four months of the financial year, which is almost half the pace of the same period a year ago.

Economic activity is back to pre-pandemic levels, and there isn't a need for panic-driven cash withdrawals, which leads to a drop in cash in circulation, a trader with a state-owned bank said.

In April-July, the cash in circulation increased to Rs 508 billion $6.38 billion compared to Rs 928 billion in the same period last year and a mammoth Rs 2.25 trillion in 2020- 21, the peak of the lock-down, according to data from the show. The currency in circulation had increased by over 4 trillion in 2020 -- 21, while the increase was tapered to 2.80 trillion in the last financial year, and market participants expect another drop in the current year.

India's banking system liquidity surplus remains around 2 trillion and Kotak Mahindra Bank expects the surplus to be around Rs 1.50 trillion by the end of the week.