The government said it did not expect the entire volume of demonetised Rs.500 and Rs.1,000 currency notes to come back into the system, an assessment which reflects the Centre's optimism that bringing back cash adequate for revival of economic activities may not take too long.
“During the process of remonetisation, till December 30, you will have a very significant part of the currency which would have been released in the market. One of the advantages of this exercise will be that you won't have the same level of paper currency which existed on November 8,“ finance minister Arun Jaitley said.
There have been various estimates of how long it will take the government and the RBI to replace the Rs.13.7 lakh crore that was demonetised on November 8. Former finance minister P Chidambaram had said the exercise could take up to seven months. The assessment in the government is that with a lower value of currency coming back into the system, the process of replacement will be quicker and it will reduce the disruption fast. In addition, Jaitley said, demonetisation was helping change spending and business practices with much quicker adoption of new technologies.
“The volume of trade, volume of business will grow in size but the volume of paper currency will shrink.Therefore, you should not expect the same amount of currency... it will be lesser but the balance will be replaced by other different modes. It will be debit cards, credit cards, it will be e-wallets and that seems to be happening,“ he said.
The minister said nearly 80 crore debit and credit cards were in circulation, with around 45 crore being active. “Don't forget you have only 25 crore families in India and that includes people living below the poverty line. You have almost 23 crore e-wallets, something that started less than one and a half years ago,“ he added.
The use of e-wallets has surged over the last three weeks and consumers are increasingly using plastic currency for day-to-day purchases. Jaitley said the process of change was quick and cut across income segments. “Presentations made by various banks and UPI [shows] this exercise goes beyond smartphones to feature phones also. It you look at the numbers, this number is not merely related to the affluent Indian. It probably is penetrating much faster. From the affluent, it went to the aspirational and from the aspirational it is percolating downwards,“ he said.
Jaitley said despite the disruption, the move enjoyed popular support and the pain during a quarter or two was going to result in better prospects over the next 12-15 quarters. The minister said rabi sowing was higher and despite the maximum disruption in November, auto sales had not seen a sharp impact.
“During the process of remonetisation, till December 30, you will have a very significant part of the currency which would have been released in the market. One of the advantages of this exercise will be that you won't have the same level of paper currency which existed on November 8,“ finance minister Arun Jaitley said.
There have been various estimates of how long it will take the government and the RBI to replace the Rs.13.7 lakh crore that was demonetised on November 8. Former finance minister P Chidambaram had said the exercise could take up to seven months. The assessment in the government is that with a lower value of currency coming back into the system, the process of replacement will be quicker and it will reduce the disruption fast. In addition, Jaitley said, demonetisation was helping change spending and business practices with much quicker adoption of new technologies.
“The volume of trade, volume of business will grow in size but the volume of paper currency will shrink.Therefore, you should not expect the same amount of currency... it will be lesser but the balance will be replaced by other different modes. It will be debit cards, credit cards, it will be e-wallets and that seems to be happening,“ he said.
The minister said nearly 80 crore debit and credit cards were in circulation, with around 45 crore being active. “Don't forget you have only 25 crore families in India and that includes people living below the poverty line. You have almost 23 crore e-wallets, something that started less than one and a half years ago,“ he added.
The use of e-wallets has surged over the last three weeks and consumers are increasingly using plastic currency for day-to-day purchases. Jaitley said the process of change was quick and cut across income segments. “Presentations made by various banks and UPI [shows] this exercise goes beyond smartphones to feature phones also. It you look at the numbers, this number is not merely related to the affluent Indian. It probably is penetrating much faster. From the affluent, it went to the aspirational and from the aspirational it is percolating downwards,“ he said.
Jaitley said despite the disruption, the move enjoyed popular support and the pain during a quarter or two was going to result in better prospects over the next 12-15 quarters. The minister said rabi sowing was higher and despite the maximum disruption in November, auto sales had not seen a sharp impact.
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