Note in circulation rise 8% annually to Rs 32 trillion: Finance Minister

Finance Minister Nirmala Sitharaman on Monday said note in circulation (NiC) has witnessed an annual growth of 7.98 per cent to Rs 31.92 lakh crore as of December 2, 2022.

The demand for currency depends upon several macroeconomic factors, including economic growth and level of interest rates, she said in a reply to the Lok Sabha.

The quantum of cash or banknotes in the economy depends on the requirement for meeting the demand for banknotes due to GDP growth, inflation, replacement of soiled banknotes and growth in non-cash modes of payment.

She stressed that the mission of the government is to move towards a less cash economy to reduce the generation and circulation of black money and to promote the digital economy.

Both the government and RBI have taken measures to promote a less cash economy and encourage digital payment, she said.

With regard to ‘Rationalisation of Merchant Discount Rate (MDR) for Debit Card Transactions’, she said the RBI has advised banks to ensure that merchants on-boarded by them do not pass on MDR charges to customers while accepting payments through debit cards.

The Department of Revenue advised banks to immediately refund charges collected, if any, on or after January 1, 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, the minister noted.

Minister of State for Finance Pankaj Chaudhary in a reply to the House said crypto assets are by definition borderless and require international collaboration to prevent regulatory arbitrage.

“Therefore, any legislation on the subject can be effective only with significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards,” he said.

Currently, he said, policy related to crypto assets and related ecosystem is with the Ministry of Finance.

Replying to another question, Chaudhary said, there are four stock exchanges having commodity derivatives segment viz, Multi Commodity Exchange of India Limited (MCX), National Commodity & Derivatives Exchange Limited (NCDEX), Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE) at present.

The Consumer Food Price Inflation (CFPI) has declined from 7.01 per cent in October 2022 to 4.67 per cent in November 2022, he said, adding the all-India average retail prices of the pulses have not exhibited any sharp and consistent increase in recent months.

In another reply, Chaudhary said the total Foreign Direct Investment (FDI) inflow in the country increased from USD 81,973 million in FY21 to USD 84,835 million in FY22, reflecting increased foreign investment opportunities in the country.

To promote FDI, he said, the government has put in place an investor-friendly policy, wherein most sectors, except certain strategically important sectors, are open for 100 per cent FDI under the automatic route.

The government reviews the FDI Policy on regular basis to ensure that India remains an attractive and investor-friendly destination.

The government is carefully monitoring the CAD and early in the current financial year had increased customs duty on gold from 10.75 per cent to 15 per cent to restrain gold imports, which are likely to reduce CAD, he said.

Further, the RBI also announced a series of measures to increase foreign exchange inflows to finance the Current Account Deficit, he added.

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