Mumbai: Apart from the overall increase in economic formalization in the past five-six years, the main component of the informal economy – cash in circulation (CIC) as a percentage of GDP – continues to rise year to year, restrictions on the year’s prohibition on record in 2016 when it fell to 8.7 percent, according to a report.
According to a report by SBI research, almost 80 percent of the economy has been formalized in the last five years with every aspect of non-cash economic components including Agri’s praise, getting traction.
In a detailed report on Monday, SBI Research said that after dipping 8.7 percent of GDP in 2016 (after note-ban), cash in circulation (CIC) as a percentage of GDP had risen again to 13.1 percent so far fiscal.
Just a little from the peak of 14.5 percent in FY21, which could be due to insecurity and uncertainty driven by pandemics.
During the FY08-FY10, when the economy was at a scorched growth rate, sniffing on almost two-digit growth, each CIC was placed at 12.1, 12.5 and 12.4 percent.
The same trend continued with small variations in the next five years also peaked at 12.4 percent on FY11 and fell to 11.4 percent on TA15, according to SBI reports written by Soumya Kanti Ghosh, the group’s economic adviser.
Ghosh associated high 14.5 percent of CIC to FY21 to the collapse of the economy due to a pandemic, where GDP reported the worst contraction of 7.3 percent.
If the situation is normal, nominal GDP growth in FY21 and FY22 will be much higher and as a result, CIC will also follow trends as a witness to the Pre-Note ban.
According to him, without the destruction of GDP induced pandemic, the CIC-GDP ratio will be at 12.7 percent by opposing 12.4 percent in FY11 as because of a pandemic, people may have as many as Rs 3.3 lakh crore cash as precautions.
Come to digital transactions, 3.5 billion transactions worth 6.3 lakh crore were recorded through UPI in October 2021, which was 100 percent more than the same period last month and in terms of transaction value, it was 103 percent more than October 2020.
Data Also shows that UPI transactions have surged 69 times since 2017, while debit card transactions are stagnated that show preferences and shifts to UPI.
UPI Transactions have surged 69 times in the last four years – from 1,700 crore Rs in 2017 to RS 15,100 Crore in 2018 to RS 29,900 Crore in 2019, to RS 57,100 Crore at 2020 to RS 1,17,100 Crore so far in 2021 .
Similarly, credit card spending rose manifold between 2012, when it was just Rs 1,500 crore, and 2018 when it touched Rs 10,100 crore.
Then firmly add 30 percent more in two years to cross RS 13,000 crore and peaked at RS 13,500 Crore in 2020, according to the report.
It adds that credit card spending is on track to set a record this year because it has already reached RS 13,300 Crore, according to the report.
Again, the debit card shopping also continued to get traction with 2012 to see Rs 12,100 Crore transactions, which rose to the RS 38,800 Crore in 2016 but declined sharply in 2017 to Rs 15,600 Crore.
More doubling the following year to Rs 32,700 Crore and peaked at Rs 56,300 Crore in 2019 and again steeply fell to the RS 13,800 Crore in 2020 and continued to the south in 2021 at Rs 9,700 Crore, the report said, said the report.
Ghosh also noted that taxes as a percentage of GDP had also surged since FY16 but declined after FY19, reflecting changes in the 2019 budget.
The GDP ratio has surged in the pandemic year again reflecting formalization efforts.
The PDB-GDP ratio jumped from 10.5 percent to FY16 to 11 percent on TA19 but backed since then, because the exception limit was raised to Rs 5 Lakh in the FY20 budget.
In Macrofront, the economy inaugurated much greater: the share of the informal gva sector for total GVA for FY18 reached 52.4 percent.
Employ this methodology (except for agriculture and allied activities), the informal economy may only be around 15-20 percent of formal GDP, according to the report.
Even the formalized agriculture if the number of Kisan Credit Cards (KCC) is an indication of anything.
In the past three-four years, outstanding per card has increased from RS 96,578 on FY18 to RS 1,67,416 on FY22, an increase of Rs 70,838, which was translated into agri credit formalization at Rs 4.6 lakh crore and there were 6.5 Crore.
KCCS.
According to the GST portal, between August 2018 and March 2021, the number of new MSMEs (micro, small and medium enterprises) was included at 499.4 lakh and was under GST.