Mumbai: Digital Payment Index Reserve Bank of India also capture digital deployment, taking into account the growth of the payment infrastructure.
Of the four main objectives demonetisasi, India seems to have done well on three.
Already there is a rise of digital transactions.
In addition, there is also a decrease in counterfeit currency.
Counterfeit notes detected continued to fall from 3.1 lakh in FY19 to 2.9 lakh in FY20 and 2 lakh in FY21.
There are also indications that the economy is more formalized.
According to the chief economist of the SBI Group Soumya Kanti Ghosh, there are indicators that the informal economy has shrunk to 20% of GDP from 50% a few years ago.
This is comparable with Europe and much better than Latin American countries where the size of the informal economy is estimated at 34%.
“The increase in GST collections although GDP shrank clearly show that the formalization have ensured fiscal policy can be used as a means of counter-cyclical fiscal policies when earnings fell due to the pandemic.
This is a clear break from the past because fiscal policy is always used as a tool of fiscal policy pro- cycles in India, “said Ghosh.
Recent data shows that despite the revival in economic activity, there is no proportional increase in currency in circulation.
High levels of digitization that has provided the economy the capacity to grow without a corresponding increase in cash.
“Increasing the formalization and the rise of the currency under circulation are not mutually exclusive.
Stakeholders in the formal economy are also consumers.
Although they may have more cash, more transactions are now captured through digital footprint,” said Ghosh.
According to Ghosh, even post-pandemic wave in the form of cash is an aberration.
“If we compare the ratio of currency / GDP in FY20 (pre-pandemic) by FY11, the number is actually lower.
For example, in FY20, it was at 12.1% and in FY11 it was at 12.4%.
So indeed, we become more digital and probably less cash intensive, “said Ghosh.