The currency in circulation (CIC) declined by Rs 7,600 crore in the Diwali week, making it the first such happening in two decades, a report said on Thursday.
This was made possible courtesy of a greater reliance on digital payments by people, the report by economists at SBI said, adding that the Indian economy is undergoing a structural transformation at present.
They clarified that the Diwali week in 2009 had also witnessed a marginal Rs 950 crore decline in currency in circulation, but that was purely due to the economic slowdown amid the global financial crisis.
"The innovations in technology have changed the Indian payment system. Over the years, the Indian cash lead economy now has changed to a smart-phone lead payment economy," they said.
The economists also said that a lower currency in circulation also is akin to a cut in the cash reserve ratio for the banking system as it results in lower leakage of deposits and will have a positive impact on monetary transmission as ...
