Noteworthy: Rs 500 minting up 17 fold in 10 years

Discussion in 'Economy & Infrastructure' started by Yusuf, Dec 11, 2011.

  1. Yusuf

    Yusuf GUARDIAN Administrator

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    There has been a fundamental change in what is sitting in an Indian's wallet: it's got more peach-pink and moss-green than ever before. The appetite for the big bills - Rs 1,000 and Rs 500 - is growing furiously.

    The figures tell the story. The number of Rs 500 notes minted across the country has grown almost 17 fold in the last decade, from 213 million pieces in 2000-2001 to 3,543 million pieces in 2009-10. The number of Rs 1,000 notes minted annually has grown nearly nine times, from 115 million in 2000-01 to 1,008 million in 2009-10.

    Today, there are fewer notes of Rs 20 and Rs 50, whether individually or collectively, than the total number of Rs 500 notes out there. These notes have quietly disappeared from automated teller machines with the value of every cash withdrawal rising. "Growth in the value of banknotes outpaced that of volume, reflecting the continuing compositional shift towards higher denomination banknotes, particularly 1,000 and 500," the RBI said in its annual report.

    RTI activist Manoranjan Roy, who sought information on the number of notes printed by the RBI, found that the big denomination notes are in huge demand.

    Economist Ajit Ranade tried to explain the demand pointing at the near double-digit inflation for the last two years. "The same lifestyle today requires 10-20% more money." he said.

    K Gayathri from the Institute of Social and Economic Change, Bangalore, added that the growing economy had put more money in people's hands, especially those from the manufacturing and service sectors. Consequently, spending too had gone up.

    Companies that run ATMs too say they are stocking more money in the machine trays as the "average ticket size" (simply put, the one time withdrawal) has ballooned from Rs 5,000 to Rs 7,000 approximately in the last three years. "Cost of living has gone up, the rise in our aspirations and desires push up demand for cash," said Mani Mamallan, chief marketing officer of C-H Technologies that manages ATMs for the State Bank of India.

    Currency in circulation is the largest component of reserve money and is primarily determined by demand. "There was acceleration in currency in circulation in 2010-11 due to increased demand due to economic growth, high inflation and low yield on deposits," said RBI officials.

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