Statistics and charts

Demonetisation : Would India be in queue for 75 days more ?

Source The Economic Times
Last Updated29 Nov 2016

Government of India took decision to demonetisation of ₹500 and ₹1000 banknotes on 8 November 2016. And After 19 days of demonetisation, till 27 nov 2016, banks have received deposits and old notes submitted for exchange worth nearly Rs 8,44,982 lakh crore. Total deposits amount is Rs.8,11,033 crore and exchanged currency notes is Rs.33,948 crore. Public have withdrawn, during this period, Rs 2,16,617 crore from their accounts either over the counter or through ATMs.

PeriodWithdrawDepositExchange
10 nov to 18 nov (9 working days) 1,03,3165,11,56533,006
19 nov to 27 nov (5 working days) 1,13,3012,99,468942
Total (10 nov 2016 to 27 nov 2016) 2,16,6178,11,03333,948

To project how long India will be remain in queues, let's take above data of last 5 working days, from 19 nov to 27 nov, for upcoming days. On 28 October 2016 the total banknotes in circulation in India was ₹17.77 lakh crore. In terms of value, the annual report of Reserve Bank of India (RBI) of 31 March 2016 stated that total bank notes in circulation valued to ₹16.42 lakh crore of which around ₹14.18 lakh crore (nearly 86%) was ₹500 and ₹1000 banknotes.

Since due to demonetisation, 86% of Rs. 17.77 lakh crore which is around of Rs. 15.28 lakh crore is now out of circulation (as of 28 October 2016). India government have to circulate new notes of worth Rs. 15.28 lakh crore for balance the economy of country.

Till 27 nov, Rs 2.17 lakh crore has been withdrawn using counter and ATMs and Rs 0.34 lakh crore has been exchanged, total Rs 2.51 lakh crore has been circulated in India. Now there is need of new notes of worth Rs. 12.77 lakh crore (15.28-2.51) to move country at same position before demonetisation.

If circulation rate will remains similar (last 5 working days ) for upcoming days, it will take 57 days more for circulate currency of worth Rs 12.77 lakh crore. Average working days of banks is 22-23 days per month, so this 57 days is next 75 days (2 and half months) for financial work. Hence, India may remain in queue for 2 and half more months (If sufficient amount of notes has been already printed).