For Prelims: Currency with the Public, Currency in Circulation (CIC), CIC-to-GDP Ratio, Currency with public (Oct 15, 2026), Pre-demonetisation currency (Nov 4, 2016), CIC-to-GDP ratio (FY26), CIC-to-GDP ratio (March 2016), Total digital payments (FY2025-26)
For Mains: Cash persistence, CIC-to-GDP ratio, digital payments surge, structural cash demand, demonetisation impact assessment
Source:
Indian Express
5 facts for one-day exams
SSC, railway, police and teaching exams ask direct questions like these.
- Demonetisation was announced by PM Modi on November 8, 2016.
- Currency with the public was ₹42.55 lakh crore as of October 15, 2026.
- Pre-demonetisation currency with the public was ₹17.97 lakh crore (Nov 4, 2016).
- CIC-to-GDP ratio in FY26 was 12.1%, same as in March 2016.
- Total digital payments in FY2025-26 were ₹3,251.04 lakh crore.
Why in the news?
Ten years after the 2016 demonetisation, cash remains dominant in India. Currency with the public has more than doubled from ₹17.97 lakh crore in Nov 2016 to ₹42.55 lakh crore in Oct 2026. Although digital payments have surged, the currency-in-circulation-to-GDP ratio has returned to its pre-demonetisation level of 12.1%, showing that India's reliance on physical cash has not fundamentally changed.
Summary
- Currency with the public stood at ₹42.55 lakh crore as of October 15, 2026, up 137% from the pre-demonetisation level of ₹17.97 lakh crore (Nov 4, 2016).
- The CIC-to-GDP ratio for FY26 was 12.1%, identical to the March 2016 level, indicating no structural reduction in cash dependence.
- Despite a push for a 'less cash society', total digital payments in FY2025-26 reached ₹3,251.04 lakh crore, with wallets dominating transaction volume (51.8%) and credit cards leading transaction value (78%).
Highlights
Cash Still King
Currency with the public has more than doubled to ₹42.55 lakh crore in 10 years since demonetisation, showing persistent cash preference.
CIC-to-GDP Ratio Back to Pre-2016 Level
Despite digital payment growth, the currency-in-circulation-to-GDP ratio has returned to 12.1%, same as in March 2016.
Digital Payments Surge
Total digital payments in FY2025-26 reached ₹3,251.04 lakh crore, with wallets capturing 51.8% of transaction volume.
Background
On November 8, 2016, PM Modi announced the demonetisation of ₹500 and ₹1,000 notes, which accounted for 86% of currency in circulation. The stated goals were to curb black money, counterfeit currency, and illegal financing, and to push India towards a cashless economy. The move caused an immediate cash crunch, disrupted businesses, and led to a GDP growth decline of nearly 1.5 percentage points.
Key Analysis and Impact
A decade later, cash has not been driven out. Currency with the public has risen 137% from pre-demonetisation levels. The CIC-to-GDP ratio, after spiking to 14.4% in 2020-21 (Covid-19 lockdown), has settled back at 12.1%, identical to March 2016. This indicates that while the economy has grown, cash demand has grown proportionally. Digital payments have boomed—₹3,251.04 lakh crore in FY2025-26—but cash remains a parallel pillar, especially for daily transactions.
Way Forward
The data suggests that policy measures must go beyond supply-side digital infrastructure to address the structural demand for cash, including informal sector dependence, tax compliance issues, and trust in digital systems. Continued focus on financial inclusion, UPI expansion, and reducing transaction costs for small merchants may gradually lower the CIC-to-GDP ratio over the long term.
Key metrics before and after demonetisation
| Metric | Pre-demonetisation (Nov 2016 / March 2016) | Current (Oct 2026 / FY26) |
|---|---|---|
| Currency with the public | ₹17.97 lakh crore | ₹42.55 lakh crore |
| CIC-to-GDP ratio | 12.1% (March 2016) | 12.1% (FY26) |
| Total digital payments (annual) | ₹29.39 lakh crore (FY2015-16, cards only) | ₹3,251.04 lakh crore (FY2025-26) |
Background GK
Textbook concepts you need to understand this news
- Currency with the Public
- Total currency in circulation (notes and coins) minus cash held by banks. It represents the physical cash held by individuals and businesses.
- Currency in Circulation (CIC)
- All currency notes and coins issued by the central bank (RBI) that are physically used for transactions within the economy.
- CIC-to-GDP Ratio
- The ratio of currency in circulation to Gross Domestic Product. A higher ratio indicates greater reliance on cash; a lower ratio suggests a shift towards digital payments.
Facts to remember
Tap a card to see the answer. Try to recall it first.
How exams will ask this
- Data: Currency with the public in Oct 2026: ₹42.55 lakh crore; pre-demonetisation (Nov 2016): ₹17.97 lakh crore
- Data: CIC-to-GDP ratio FY26: 12.1% (same as March 2016)
- Data: Total digital payments FY2025-26: ₹3,251.04 lakh crore
Don't make this mistake!
They will ask whether demonetisation permanently reduced cash dependence. The trap is to assume it did. The correct answer is that cash remains king; currency with the public has more than doubled, and the CIC-to-GDP ratio is back to the pre-demonetisation level of 12.1%.
Write these in mains answers
- Cash persistence, CIC-to-GDP ratio, digital payments surge, structural cash demand, demonetisation impact assessment
Stuck? Get it in one tap
Demonetisation was the government's 2016 decision to cancel ₹500 and ₹1,000 notes. The goal was to reduce black money and push people towards digital payments. Ten years later, cash in people's hands has more than doubled to ₹42.55 lakh crore. The ratio of cash to the size of the economy is back to where it was before demonetisation. This shows that Indians still use a lot of cash, even though digital payments have also grown a lot.
- Demonetisation was announced by PM Modi on November 8, 2016.
- Currency with the public was ₹42.55 lakh crore as of October 15, 2026.
- Pre-demonetisation currency with the public was ₹17.97 lakh crore (Nov 4, 2016).
- CIC-to-GDP ratio in FY26 was 12.1%, same as in March 2016.
- Total digital payments in FY2025-26 were ₹3,251.04 lakh crore.
- Economy: Monetary policy and currency management
- Economy: Demonetisation and its impact
Related concepts: Currency with the Public, Currency in Circulation (CIC), CIC-to-GDP Ratio
Practice questions
Pick an answer, then read the explanation.
- Q1Easy
Which institution publishes data on 'currency with the public' in India?
Explanation: The Reserve Bank of India (RBI) is the central bank that issues currency and publishes data on currency in circulation and currency with the public. The Ministry of Finance deals with fiscal policy, SEBI regulates markets, and the NSO compiles GDP data, but currency data comes from the RBI.
- Q2Hard
Consider the following statements regarding the impact of demonetisation (2016) on India's cash economy:
- 1.Currency with the public has more than doubled in the decade since demonetisation.
- 2.The CIC-to-GDP ratio in FY26 was lower than its pre-demonetisation level of March 2016.
- 3.Digital payments in India have grown significantly, with wallets dominating transaction volume in FY2025-26.
Which of the statements given above is/are correct?
Explanation: Statement 1 is correct: currency with the public rose from ₹17.97 lakh crore (Nov 2016) to ₹42.55 lakh crore (Oct 2026). Statement 2 is incorrect: the CIC-to-GDP ratio in FY26 was 12.1%, the same as in March 2016, not lower. Statement 3 is correct: wallets accounted for 51.8% of transaction volume in FY2025-26. Hence option C is correct.
- Q3Medium
What was the total value of digital payments in India during FY2025-26, as per the RBI data?
Explanation: Total digital payments in FY2025-26 amounted to ₹3,251.04 lakh crore. Option A is not a value figure but corresponds to the number of card transactions in FY2015-16 (about 10,038.67 million, or ≈1,003.87 crore transactions). Option C (₹30.31 lakh crore) is the combined value of credit, debit and wallet transactions, not the total value of all digital payment instruments. Option D is currency with the public.
- Q4Medium
What does the return of India's CIC-to-GDP ratio to its pre-demonetisation level of 12.1% primarily indicate?
Explanation: A CIC-to-GDP ratio returning to its pre-demonetisation level shows that cash demand has kept pace with economic growth, meaning the structural dependence on cash remains. Option A is incorrect because the data shows cash is still high. Option C is wrong because GDP grew at 6-7% annually. Option D is incorrect because currency in circulation has risen sharply.
Frequently asked questions
1. What was the currency with the public in India as of October 2026?
Currency with the public stood at ₹42.55 lakh crore as of October 15, 2026, more than double the pre-demonetisation level of ₹17.97 lakh crore in November 2016.
2. What is the CIC-to-GDP ratio and what was it in FY26?
The CIC-to-GDP ratio measures currency in circulation as a percentage of GDP. In FY26, it was 12.1%, the same as in March 2016 before demonetisation.
3. How much were total digital payments in India in FY2025-26?
Total digital payments in FY2025-26 amounted to ₹3,251.04 lakh crore, covering RTGS, retail transfers, card payments and prepaid instruments.
4. Which denominations were demonetised on November 8, 2016?
The ₹500 and ₹1,000 notes were demonetised, which together accounted for approximately 86% of the currency in circulation at that time.
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- Original9 November 2026 · Read story
