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Currency With Public Hits Record At Over Rs 18 Lakh Crore

Currency with the public has reached a record high level of over Rs 18.5 lakh crore, more than double from a low of about Rs 7.8 lakh crore it had hit post-demonetisation decision in late 2016, as per RBI data.
At the same time, the total currency put in circulation by the Reserve Bank has also more than doubled to over Rs 19.3 lakh crore — from a low of about Rs 8.9 lakh crore post- demonetisation. Currency with the public is arrived at after deducting cash with banks from total currency in circulation. This high level of currency available with the public is in sharp contrast to the reported cash crunch in various parts of the country a few months ago.
There has been a fear that hoarding or accumulation of large amounts of cash for various reasons could have triggered an artificial currency crunch. The figure again came back above Rs 10 lakh crore by February 2017 and crossed Rs 15 lakh crore mark in September last year.
A similar trend was seen in the currency in circulation figure, which dropped sharply from November 2016 till early January 2017 due to demonetisation, before starting to go up. The total money supply, described as M3 by the RBI, now stands at over Rs 140 lakh crore — nearly 11 per cent higher than the year-ago level.
It stood at about Rs 120 lakh crore during the demonetisation period and was below Rs 100 lakh crore level before the Modi government came to power. The M3 includes currency with the public, deposit money of the public (demand deposits with the banking system plus ‘other’ deposits with the RBI) and the time deposits with the banking system.
This figure is equivalent to the net bank credit to the government, plus the bank credit to the commercial sector, plus net foreign exchange assets of the banking sector, plus government’s currency liabilities to the public, minus the net non-monetary liabilities of the banking sector. The government’s currency liabilities to the public comprise rupee coins and small coins.

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