Cash demand was falling even before note ban, suggests RBI data

Even before demonetisation was announced, demand for cash from the public had been reducing month by month, indicating that people were either battling a slowdown or their preferences were shifting to digital payments, an analysis of the Reserve Bank of India (RBI) data shows.

The ‘currency with the public’ component of the money supply grew at a declining rate during the first six months of 2016, and thereafter grew negative. That is a reflection of demand, rather than RBI’s intention to curb cash payment.

Arun Kumar, former professor of economics at Jawaharlal Nehru University (JNU) in New Delhi, says currency