Lok Sabha Question No. 1865 (UNSTARRED), answered on 2022-12-19
Subject: Aggregate Money and Liquidity
Ministry: FINANCE
Asked by: Anurag Sharma, D. M. Kathir Anand

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS LOK SABHA UNSTARRED QUESTION NO. 1865 TO BE ANSWERED ON 19.12.2022

*****

## Aggregate Money and Liquidity

1865: SHRI ANURAG SHARMA : SHRI D.M. KATHIR ANAND:

Will the Minister of Finance be pleased to state:

- (a) the details of the status of money aggregate and liquidity aggregate as on date;
- (b) whether the Government is restricting the use and circulation of Rs. 2000 currency notes and if so, the details thereof;
- (c) whether the total money in circulation with public have crossed Rs. 30 lakh crores and if so, the details thereof;
- (d) the reasons for the huge increase in circulation of money with public in the last six years especially after the implementation of demonetisation in 2016; and
- (e) whether the Government is insisting people to use more of digital transactions than the cash transactions and if so, the details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SHRI PANKAJ CHOUDHARY)

- (a): The details regarding monetary and liquidity aggregates are given in the Table below.

Table: Monetary and Liquidity Aggregates

| Item                             | Outstanding Amount (₹ Crore)   | Outstanding Amount (₹ Crore)   | Outstanding Amount (₹ Crore)   |
|----------------------------------|--------------------------------|--------------------------------|--------------------------------|
| Item                             | November 20, 2020              | November 19, 2021              | November 18, 2022              |
| Reserve Money (Base Money)       | 33,17,074                      | 37,67,894                      | 41,59,065                      |
| Money Supply (Broad Money)       | 1,79,37,939                    | 1,96,45,634                    | 2,13,97,426                    |
| Aggregate Deposits               | 1,52,22,501                    | 1,67,19,527                    | 1,82,33,098                    |
| Scheduled Commercial Bank Credit | 1,04,34,880                    | 1,11,62,193                    | 1,29,47,735                    |

(b): Printing of banknotes of a particular denomination is decided by Government of India in consultation  with  Reserve  Bank  of  India  (RBI)  to  maintain  desired  denomination  mix  for facilitating transactional demand of public. No fresh indent has been placed with the presses for printing of ₹ 2000 denomination notes from 2018-19 onwards. (c):  As on 02.12.2022, the value of banknotes in circulation was ₹ 31,92,622 crore. (d):  The Government of India, in consultation with the Reserve Bank of India, decides the volume and value of banknotes to be printed each year. The quantum of banknotes that needs to be printed broadly depends on the requirement for meeting the demand for banknotes due to  inflation,  GDP  growth,  replacement  of  soiled  banknotes,  reserve  stock  requirements, growth in non-cash modes of payments, etc.

- (e):  Government  of  India  and  RBI  have  taken  various  steps  for  promotion  of  Digital Payments.  Details  of  steps  taken  by  the  Government  of  India  and  RBI  for  promotion  of digital payments and digital transactions are at Annexure-I .

*****

## Statement referred to in reply to part (e) of Lok Sabha Unstarred Question No. 1865 for answer on 19.12.2022

## A. Steps taken for promotion of digital payments

- i. Incentive  scheme  for  promotion  of  RuPay  Debit  cards  and  low-value  BHIM-UPI transactions (P2M) to give a further boost to digital transactions in the country. This scheme  facilitated  Banks  in  building  robust  digital  payment  ecosystem,  promoting RuPay  Debit  card  and  BHIM-UPI  digital  transactions,  across  all  sectors  and segments of the population and further deepening of digital payments in the country.
- ii. Other Incentive/cashback schemes such as BHIM Cashback schemes for Individuals &  Merchants,  BHIM  Aadhaar  Merchant  Incentive  Scheme,  BHIM-UPI  Merchant On-boarding Scheme Merchant Discount Rate (MDR) Reimbursement scheme, were launched for changing the customer/merchant behaviour for faster adoption of digital payments.
- iii. MeitY  issued  advisories to Central Ministries/Departments and States/UTs to improve payments acceptance infrastructure and thereby enable the citizens to pay by a variety of modes such as Internet banking, mobile banking, and mobile applications etc.
- iv. Government of India (MeitY) launched the scheme titled 'Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA)' to usher in digital literacy in rural India.
- v. All  Banks  and  Payment  Service  Providers  to  undertake  awareness  campaigns  for promotion of secure payment practices and generate information security awareness. Materials are disseminated through portals'www.infosecawareness.in', www.cyberswachhtakendra.gov.in .
- vi. Awareness campaigns were organized in the Capital Cities of North East to promote digital  payments  including  BHIM  app.  Newspaper  campaigns,  Digital  Theatre Campaigns,  FM Radio campaigns  and  hoarding  campaigns  were  also  organised  to promote digital payments.
- vii. Various promotion and awareness campaigns, through traditional means of publicity as  well  as  emergent  means  such  as  social  media  platforms,  have  been  initiated  to encourage citizens to use digital payments.
- viii. As  part  of  the  week-long  'Azadi  Ka  Digital  Mahotsav',  Government  of  India celebrated  India's  Digital  Payment  Journey  through  a  marquee  'Digital  Payment Utsav'.  The  day  celebrated  the  journey  and  rise  of  digital  payments  in  India  and brought together leaders from the Government, Banking sector, Fintech companies, and  Startups.  Top  Banks  were  awarded  &  recognized  in  various  categories  for achievements  in  FY  2019-20  and  FY  2020-21  towards  the  promotion  of  Digital Payments.
- ix. MeitY has integrated Digital Payment Grievances along with Ministry of Consumer Affairs (MoCA) for utilising it with National Consumer Helpline (NCH) platform of Department of Consumer Affairs (DoCA). All the major banks and financial service institutions  have  been  on-boarded  on  NCH  Platform.  The  platform  is  live  and receiving Digital Payment related grievances.
- x. Reserve  Bank  of  India  (RBI)  has  been  expanding  the  scope  of  the  existing  digital payment option  by  adding  more  features  and  making  it  inclusive.  UPI123Pay  was introduced to enable feature phone users to use UPI. Features like UPI Lite, an ondevice wallet in UPI and linking of credit cards to UPI will further increase digital transactions. RBI has also taken various steps to enhance security of digital payment transactions (including card transactions, online transactions, etc.) and reduce frauds.

## B. Steps taken to promote digital transactions

- i. Through  Finance  (No.2)  Act,  2019  section  269SU  was  inserted  to  the  Income-tax Act, 1961 (the Act) so as to provide that every person, carrying on business, shall, provide  facility  for  accepting  payment  through  the  prescribed  electronic  modes,  in addition to the facility for other electronic modes of payment, if any, being provided by such person, if his total sales, turnover or gross receipts in business exceeds fifty crore rupees during the immediately preceding previous year.
- ii. In order to ensure compliance, section 271DB was inserted in the Act to provide that the  failure  to  provide  facility  for  electronic  modes  of  payment  prescribed  under section 269SU of the Act shall attract penalty of a sum of five thousand rupees, for every day during which such failure continues.
- iii. In addition to above, amendment was also made to Payment and Settlement Systems Act, 2007 so as to provide that no bank or system provider shall impose any charge upon anyone, either directly or indirectly, for using the modes of electronic payment prescribed under section 269SU of the Act.
- iv. Vide  notification  no.  105/2019  dated  30.12.2019,  rule  119AA  was  inserted  to  the Income-tax Rules, 1962 to provide for following modes of payment for the purpose of section 269SU:
5. (a) Debit Card powered by RuPay;
6. (b) Unified Payments Interface (UPI) (BHIM-UPI); and
7. (c) Unified  Payments  Interface  Quick  Response  Code  (UPI  QR  Code) (BHIM-UPI QR Code)
- v. Further,  through  circular  no.  16/2020  dated  30.08.2020,  banks  were  advised  to immediately  refund  charges  collected,  if  any,  on  or  after  1 st January,  2020  on transactions carried out using the electronic modes prescribed under section 269SU of  the  Act  and  not  to  impose  charges  on  any  future  transactions  through  the prescribed modes.
- vi. The Finance (No.2) Act, 2019 has inserted section 194N in the Act to provide for levy of TDS @ 2% on cash withdrawal exceeding ₹ 1 crore from a Bank/Post Office account. To ensure filing of return and to keep track on cash withdrawals by the nonfilters, the Finance Act, 2020 lowered the threshold of cash withdrawal to ₹ 20 lakh and also mandated TDS at the higher of 5% on cash withdrawal exceeding ₹ 1 crore by these non-filers.
- vii. The existing rate of deemed profit under presumptive scheme for small businesses has been reduced from 8% to 6% in respect of digital turnover. The limit for tax audit for persons who are undertaking 95% of their transactions, in modes other than cash, has been increased from ₹ 5 crore to ₹ 10 crore.
- viii. The  limit  of  cash  donations  to  charitable  organisation  has  been  reduced  from  ₹ 10,000/-  to  ₹  2,000/-.  Acceptance  of  cash  donations  exceeding  ₹  2,000/-  has  been prohibited  for  political  parties.  The  limit  for  cash  business  expenditure  has  been reduced from ₹ 20,000/- to ₹ 10,000/-.
- ix. Section 269ST of the Act inter-alia restricts acceptance of cash of two lakh rupees or more  in  the  circumstances  specified  therein,  through  modes  other  than  an  account payee  cheque  or  an  account  payee  bank  draft  or  use  of  electronic  clearing  system through a bank account. Section 269SS and 269T of the Act, respectively, prohibit acceptance and repayment of any loan or deposit in cash more than ₹ 20,000/-.

*****