Cash in circulation more than doubles since FY17 on consumption demand

While through UPI was launched in 2016, it gained scale only after COVID-19 in 2020 and has gone up almost nine times. The value of monthly UPI transactions has gone up from Rs 2.06 lakh crore in March 2020 to a record Rs 18.07 lakh crore in February 2024.

The Reserve Bank's assessments on currency in circulation shows that currency demand often tends to be higher during festivals and prior to big elections or in a year in which the agricultural sector clocks a strong growth as it props cash demand from rural areas.

Underscoring the importance of cash in the system the CMS Info System's (which offers cash management and other business services) CMS cash index has trended in with HSBC Purchase Manager's Index since the CMS index was launched in 2017. While the CMS cash index has gone up from 100 in April 2017 to 125.6 in March 2024, the HSBC PMI went up from 100 to 117 in the same period. Th

The trend indicated a strong core;ation between the level of economic activity and cash spends. “For an to flourish, it is imperative that the payments ecosystem allows all modes of transaction. Cash payments are an indispensable complement to mobile, electronic, and other forms of digital payments" said Anush Raghavan, President, Cash Management Solutions, . "This balance is especially vital for a consumption-driven economy like India, where the ability to spend influences overall economic health.”

Smaller economies like Brazil, South Africa, Russia, and the UK had much lower volumes of CiC, when compared to the larger economies like the US, China, Japan, and India indicating the direct correlation between CIC and the size of the economy. Raghavan said.

The CMS Cash Index is a weighted index consisting of two factors namely the cash that goes into circulation via the ATM channels as replenishment and the cash collected from the organised retail channels post-consumer purchases. Both are covered by CMS Info Systems across cities and towns in India.

CMS Info Systems' Consumption Report 2024 titled ‘Unfolding India’s Consumption Story 2024’ showed that spends are increasing in consumer durables and FMCG sector and also for travel and entertainment and topped growth in FY'24. Delhi, Tamil Nadu, , West Bengal, and Karnataka lead with the highest growth in ATM withdrawals for spends in FY24.