Finance Minister Nirmala Sitharaman stated on Monday that the number of notes in circulation (NiC) has increased by 7.98% year on year to Rs 31.92 lakh crore as on December 2, 2022. In a reply to the Lok Sabha, she stated that currency demand is influenced by numerous macroeconomic factors, including economic development and interest rate levels.
The amount of cash or banknotes in the economy is determined by the need to fulfil the demand for banknotes caused by GDP growth, inflation, the replacement of dirty banknotes, and the expansion of non-cash means of payment.
She emphasised that the government’s objective is to shift away from a cash economy in order to decrease the formation and circulation of illicit money and to boost the digital economy.
She stated that both the government and the RBI have made steps to promote a cashless economy and support digital payment.
Concerning the ‘Rationalisation of Merchant Discount Rate (MDR) for Debit Card Transactions,’ she stated that the RBI has instructed banks to ensure that merchants on their books do not pass on MDR costs to clients while taking debit card payments.
The Department of Revenue advised banks to immediately refund any charges collected on or after January 1, 2020, on transactions conducted using the electronic modes prescribed under section 269SU of the Act, and not to impose charges on any future transactions conducted using the prescribed modes, the minister stated.
In a response to the House, Minister of State for Finance Pankaj Chaudhary stated that crypto assets are by definition borderless and require international coordination to prevent regulatory arbitrage.
“As a result, any regulation on the issue can be successful only with major international collaboration on risk and benefit evaluation, as well as the establishment of common taxonomy and standards,” he stated.
He stated that the Ministry of Finance is now in charge of crypto asset policy and the related ecosystem.
In response to another question, Chaudhary stated that at the moment, commodity derivatives are traded on four stock exchanges: Multi Commodity Exchange of India Limited (MCX), National Commodity & Derivatives Exchange Limited (NCDEX), Bombay Stock Exchange Limited (BSE), and National Stock Exchange of India Limited (NSE).
The Consumer Food Price Inflation (CFPI) has fallen from 7.01 percent in October 2022 to 4.67 percent in November 2022, he said, adding that the all-India average retail prices of pulses have not increased sharply or consistently in recent months.
In another response, Chaudhary stated that total FDI inflows into the nation grew from USD 81,973 million in FY21 to USD 84,835 million in FY22, suggesting greater foreign investment possibilities in the country.
To encourage FDI, he added, the government has implemented an investor-friendly policy in which most industries, with the exception of select strategically essential areas, are open to 100% FDI via the automatic method.
The FDI Policy is reviewed on a regular basis by the government to ensure that India remains an appealing and investor-friendly country.
The government is closely monitoring the CAD and raised gold customs charge from 10.75% to 15% early in the current fiscal year to limit gold imports, which is anticipated to lower CAD, he added.
He noted that the RBI has also outlined a range of steps to encourage foreign exchange inflows to cover the current account deficit.