Lok Sabha Question No. 178 (STARRED), answered on 2022-12-19
Subject: Circulation of Cash in the Economy
Ministry: FINANCE
Asked by: P. Velusamy

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS LOK SABHA STARRED QUESTION NO.178 TO BE ANSWERED ON 19.12.2022

Circulation of Cash in the Economy

## *178. SHRI VELUSAMY P.:

Will the Minister of FINANCE be pleased to state:

(a)  whether  the  Government  is  aware  of  the  fact  that  the  currency  in  circulation  is continuously rising even five years after the demonetization on 8 November, 2016 and

if so, the details thereof;

(b) the total amount of cash with public as on date in actual figure and the percentage rise in the same in comparison to last year;

(c)  whether  the  Government  proposes  to  continue  cash  back  schemes  for  using credit/debit cards and other modes of digital payment to encourage less use of cash for

financial transaction and if so, the details thereof;

(d)  whether  the  Government  is  aware  of  the  fact  that  digital  payment  providers  are charging service charges for transferring money from credit/debit cards; and

(e)  if  so,  the  steps  taken  by  the  Government  to  improve  the  digital  payment mechanism without any hidden service charges levied by the service providers?

## ANSWER

FINANCE MINISTER (SMT. NIRMALA SITHARAMAN)

(a) to (e) : A statement is laid on the table of the House.

*****

STATEMENT REFERRRED TO IN REPLY TO LOK SABHA STARRED QUESTION NO. 178 RAISED BY SHRI VELUSAMY P., HON'BLE MEMBER OF PARLIAMENT TO BE ANSWERED ON 19.12.2022 REGARDING 'CIRCULATION OF CASH IN THE ECONOMY'

- (a):  The  demand  for  currency  depends  upon  several macro-economic  factors including economic  growth  and  level  of  interest rates.The data on  Notes  in Circulation (NiC) for the years 2016 to 2022 (as on end March each year) is placed below:

## Data on Notes in Circulation (NiC)

|   Year (till 31st March) | Volume in million pieces   | % Increase/ Decrease in Volume of NiC   | Value - NiC (end-March) ( ₹ crores)   | % Increase/ Decrease in Value   |
|--------------------------|----------------------------|-----------------------------------------|---------------------------------------|---------------------------------|
|                     2016 | 90,266                     | -                                       | 16,41,571                             | -                               |
|                     2017 | 1,00,293                   | 11.11                                   | 13,10,193                             | -20.18                          |
|                     2018 | 1,02,395                   | 2.10                                    | 18,03,709                             | 37.67                           |
|                     2019 | 1,08,759                   | 6.22                                    | 21,10,892                             | 17.03                           |
|                     2020 | 1,15,977                   | 6.64                                    | 24,20,975                             | 14.69                           |
|                     2021 | 1,24,367                   | 7.23                                    | 28,26,863                             | 16.77                           |
|                     2022 | 1,30,533                   | 4.96                                    | 31,05,721                             | 9.86                            |

- (b) The data on NiC is placed below:
- (c):  Ministry  of  Electronics  and  Information  Technology,  Government  of  India  had launched a BHIM (Bharat Interface for Money) Cash back Scheme for Merchants to promote  usage  of  BHIM-UPI  amongst  merchants  by  incentivising  its  adoption  and also to encourage transactions via BHIM-UPI mode, and the scheme was active from 5th June 2017 and closed on 30th June 2018.
- (d) & (e): The mission of the Government is to move towards a less cash economy to reduce  generation  and  circulation  of  black  money  and  to  promote  digital  economy. Through  Finance  (No.2)  Act,  2019,  section  269SU  was  inserted  to  the  Income-tax

| Date              | NiC Value (in ₹ crore)   | %Increase/ Decrease in Value   |
|-------------------|--------------------------|--------------------------------|
| December 03, 2021 | 29,56,672                | -                              |
| December 02, 2022 | 31,92,622                | 7.98                           |

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.

In order to ensure compliance, section 27IDB was inserted to provide that the failure to  provide facility for electronic  modes of payment prescribed under section 269SU shall attract penalty of a sum of five thousand rupees, for every day during which such failure continues.

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.

Department of Revenue (DoR) 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:

(i) Debit Card powered by RuPay;

(ii) Unified Payments Interface (UPI) (BHIM-UPI); and

(iii)  Unified  Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code).

DoR,  vide  circular  no.  16/2020  dated  30.08.2020,  advised  banks  to  immediately refund charges collected, if any, on or after 1st 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.

Further, RBI vide circular dated December 6, 2017 on "Rationalisation of Merchant Discount  Rate  (MDR)  for  Debit  Card  Transactions",  advised  banks  to  ensure  that merchants  on-boarded  by  them  do  not  pass  on  Merchant  Discount  Rate  (MDR) charges to customers while accepting payments through debit cards. In terms of RBI circular dated March 17, 2020 on "Guidelines on Regulation of Payment Aggregators and  Payment  Gateways",  Payment  Aggregators  (PAs)  shall  ensure  that  the  extant instructions with regard to MDR are followed, and that information on other charges such as convenience fee, handling fee, etc., if any, being levied shall also be displayed upfront by the PA.