Currency in use at record 14.5% of GDP amid 'dash to cash'-

9th Nov,2021

Currency in use at record 14.5% of GDP amid 'dash to cash'-



Due to growing demand for cash and a falling GDP, the ratio of currency in circulation as a percentage of GDP reached a new high of 14.5 percent for fiscal 2020-21. On the fifth anniversary of demonetisation, however, there is a boom in all forms of digital payment, whether it is Unified Payments Interface (UPI), credit and debit cards, or FASTag, indicating that the transition to digital and cash intensity are not mutually contradictory. The global surge in currency in circulation following the pandemic has been described as a "rush to cash" in the face of great uncertainty. The United States, Spain, Italy, Germany, France, Brazil, Russia, and Turkey have all experienced this.
According to SBI group chief economist Soumya Kanti Ghosh, indicators show that the informal economy has decreased to 20% of GDP from 40% a few years ago. This is comparable to Europe and far superior to Latin American countries, where the informal economy is estimated to account for 34% of GDP.