Public deals more in cash, thanks to rural pick-up GAYATRI NAYAK TIMES NEWS NETWORK[ TUESDAY, DECEMBER 23, 2003 07:29:06 AM ] MUMBAI: The festivals are over, yet the cash in circulation is continuing its upward spiral — and at a much faster pace than last year. This rise has been attributed to a combination of factors, including the election in four states and the general pick-up in spending, particularly in the rural economy. As on December 12, the incremental growth in currency with the public amounted to Rs 31,814 crore — Rs 8,685 crore more than the growth of Rs 23,129 crore in the corresponding period of ‘02-03. Though the currency in circulation displays a cyclical pattern, and the movement throughout the year has been more or less in sync with the trend last year, there is a strong divergence since mid-November ‘03. Analysts say it is a combination of factors, the elections as well as the pick-up in the rural economy. The currency in circulation is often seen to have a strong correlation with the level of rural economic activity, mainly agriculture, as rural India still largely prefers to transact in cash rather than through the banking system. Besides, the November pick-up is also attributed to the festive demand during the period, which was not seen in the corresponding period last year. However, there is no convincing explanation besides the Assembly elections, a time when the cash demand in the economy is seen to be high. The currency in circulation — that is, the money printed by the Reserve Bank of India — largely depends on the demand for money, which in turn depends on a number of factors like the level of economic activity, among others. Sources at the Reserve Bank of India said they are keeping a close watch to ensure that the trend does not have an untoward impact on the overall money supply growth and, in turn, start fuelling inflation. A mismatch between the growth in money supply and the real sector could have inflationary impact, caused by too much money chasing too few goods in the market place. *************************************************************************** Mailing list (sbinews@xxxxxxxxxxxxx) related information: News/articles about SBI and Banking related matters published in the print media, Internet etc will be circulated through this Mailing List. The messages in this list will help in improving awareness of SBI and its activities vis-a-vis the happenings in the Banking industry. This should be of help to all staff members of SBI, particularly those who are preparing for promotional written tests/interviews/group discussions. Subscription to this Mailing List is simple and FREE. Please check the procedure below. Please share this information with other colleagues/branches that could be interested in subscribing to this Mailing List. The messages circulated here should not be deemed to have the official endorsement of the SBI or any of its employees. The correct factual position may be ascertained from official sources. To join this mailing list, just send an email to sbinews-request@xxxxxxxxxxxxx with the word 'subscribe' without the quotes in the subject of the email message. To leave this mailing list, just send an email to sbinews-request@xxxxxxxxxxxxx with the word 'unsubscribe' without the quotes in the subject of the email message. Archives (old messages) are available for viewing at: //www.freelists.org/archives/sbinews Click on the month-year at the lower left corner to view messages posted during that month. This is an announcements/newsletter type mailing list i.e. only the Moderator/s can post messages to the list. This mailing list is maintained and moderated by Sri. R.S.Pai, currently working as Chief Manager(IT-Internet Banking), SBI, Corporate Centre, Mumbai. Moderator: Smt. S. Vijaya, CM (Training), SBI, STC, Bangalore. Visit http://rspai.tripod.com for some useful Banking, Reference and Utilities Links