Simplified Laws Guide to Taxation and Legal Concern None of us will forget 8th November 2016, the day Demonetization was announced by the Government. How much cash was in circulation during that time? The Annual Report of RBI shows that the total currency (cash) in circulation was Rs.17,77,000 Crores.
The latest report of RBI, published in November 2021 (after 5 years), shows that the total currency in circulation is Rs.29,45,000 crores.
The increase in cash circulation is to the tune of Rs.11,75,000 Crores, a quantum jump of 66% over 5 years. Is it because of additional Note Printing during Covid? Partly yes, but the pre-covid currency circulation was over Rs.24,00,000 Crores. This means, after demonization, the cash with the public has continued to rise exponentially.
Ground reality –
If you do a small exercise yourself, assuming that you spend Rs.1,00,000 per year, how much money you would have spent in cash in 2016 Vs cash in 2021, you will surely notice that your cash payments have reduced considerably. Hope my assumption is right. In my case, today I have zero cash sales and very few cash payments, maybe a reduction of 70% of expenses in cash when compared to 2016.
If we are representing a spending middle-class population of the country, most of us have switched to digital payments. The data for November 2021 shows that UPI payments are at an all-time high.
In the case of the lower middle and poor class, anyway, cash utilization would be constant or maybe lower, as their earnings have not gone up substantially in the last 5 years. 96% of Indian population comprises of poor and middle-class people.
With this, we can draw an inference that the excess cash is not with the poor or the middle class.
The mystery is – where to fish for cash?
The latest news shows the recovery of Rs.250 Crores of cash from a trader in Kanpur. If you consider this as a sample, then, the cash must be concentrated only among a section of the society.
This makes the job of the Government easy. They needn’t cast a net across the country to catch fish – big or small. A clever move of identifying a few spots (only 4% of the population) can fetch a large cash hoarding.
I am confident that this Government will do its best to identify those sweet spots (maybe use ants to locate!!) to unearth excess cash, which is mostly unaccounted for. A logical conclusion to demonetization can be seen when this happens. Wish to see such a day very soon.
Really useful Article Sir