Note in circulation grew by 8% annually to Rs 32 lakh crore: Sitharaman

There has been an annual growth of 7.98% to note in circulation (NiC), with the figure standing at Rs 31.92 lakh crore as of December 2, 2022, Finance Minister Nirmala Sitharaman said in reply to a question in the Lok Sabha on Monday.

The demand for currency depends on several macroeconomic factors, including economic growth and interest rates, she said. The quantum of banknotes in the economy depends on the demand for it, which can be due to GDP growth, inflation, replacement of soiled notes, and growth in non-cash modes of payment.

She stressed that the government’s mission is to move towards a cashless economy to reduce the generation and circulation of black money and promote a digital economy. Both the government and the Reserve Bank of India (RBI) have taken measures to promote a cashless economy and encourage digital payment, she said.

MDR charges not on customers

Regarding the 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.

Also read: Retail inflation eases in Nov; here’s why relief may be short lived

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 I-T Act and not to impose charges on any future transactions through the prescribed modes, the minister noted.

On crypto assets

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

Also read: India has dodged crypto bullet thanks to cautious govt, RBI: Experts

Consumer Food Price Inflation fell

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

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

On FDI and CAD

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

Also read: RBI’s digital rupee may undermine fiat INR and banking sector

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 regularly to ensure that India remains an attractive and investor-friendly destination.

The government is carefully monitoring the Current Account Deficit (CAD), and it increased customs duty on gold from 10.75% to 15% early in the current financial year to restrain gold imports, which are likely to reduce CAD, he said. The RBI also announced a slew of measures to increase foreign exchange inflows to finance the CAD, he added.

(With agency inputs)