The US dollar may be the world's most widely used currency, but when it comes to sheer volume of banknotes in circulation, the rupee has it beaten by a wide margin, according to the Reserve Bank of India.
RBI Deputy Governor Shirish Chandra Murmu said India currently has roughly three times as many rupee notes in circulation as the US has dollar bills, and nearly six times as many as the eurozone has euro notes.
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Speaking at a cash management conference hosted by Bank Indonesia in Jakarta on August 13, he put India's total banknotes in circulation at 176 billion, against an estimated 56 billion US dollar bills and 30 billion euro notes worldwide as of the end of last year.
Why the gap is so wide
According to the RBI, India prints between 28 billion and 30 billion notes a year across six denominations, while retiring around 21 billion worn or damaged notes annually, a churn driven by the central bank's Clean Note Policy, in place since 1999, which mandates that only good-quality currency stays in circulation.
Officials attributed much of the gap to India's currency mix, which leans heavily on lower-denomination notes, meaning more individual pieces are needed to move the same amount of money compared to economies that rely on higher-value notes. Even so, the scale reflects the scope of the logistics involved in keeping cash flowing across the country, RBI said.
The 'cash paradox'
Despite the rapid rise of digital payments, physical currency in circulation continues to expand at double-digit rates each year, RBI noted, even as cash's overall share of individual transactions keeps shrinking.
The central bank described this as a "cash paradox" that complicates long-term forecasting, since transactional demand (linked to GDP growth, inflation, interest rates and digital adoption) and replacement demand (driven by note wear-and-tear) now often move in different directions.
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RBI projects currency needs roughly five years in advance to plan production accordingly.
Notes are manufactured through banknote paper mills, four currency presses and RBI/government-run ink units, and are distributed via the central bank's 19 regional offices, currency chests run by banks and government treasuries, over 250,000 ATMs, and business correspondents serving rural and smaller-town India.
With inputs from TOI
