Higher Currency in Circulation Could Signal Growth Revival: CS
Mumbai: Higher currency in circulation could be an early indicator of a pick-up in economic growth because improvement in basic infrastructure such as access to electricity, roads and phones has led to a revival in the informal economy, especially after 2008-09, Credit Suisse said in a report on Monday.
Currency in circulation is money which is physically used for transactions between consumers and businesses. Data released from RBI showed that currency in circulation has grown at 15.7% as of April 1. This rise has coincided with a fall in deposit growth, which in 2015-16 has slipped to a 53-year low of 9.9%. In a note, Credit Suisse analysts Neelkanth Mishra, Prateek Singh and Ravi Shankar pointed out that the divergence between currency in circulation and deposit growth has occurred only thrice in the past two decades. — Joel Rebello