The currency circulation to gross domestic product (GDP) ratio, a measure of the total cash going around in the financial system, touched 12% for the first time since the demonetization of ₹500 and ₹1,000 notes in November 2016.
Mint takes a look. How was the 12% figure arrived at? The total currency in circulation as of 27 March was ₹24.39 trillion.
GDP for 2019-20 is projected to be ₹203.85 trillion. Hence, the cash in the system works out to 12% of GDP. The actual figure might turn out to be higher than 12% of GDP.
The GDP forecast for 2019-20 was made before the covid-19 crisis struck. Thanks to the restrictions put in place to prevent the spread of covid-19, economic activity is bound to have taken a beating in the last 15 days of
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