Has the COVID-19 Pandemic Affected the Demand for Currency? An Analysis

Abstract

The demand for currency has always been affected by several factors, directly or indirectly, personal or impersonal. This ultimately has an effect on the currency in circulation, both the notes and coins. The central bank, Reserve Bank of India whose primary responsibility is to maintain the issue of currency in the country has to keep a track of all these factors to be able to predict the demand accurately in order to be able to supply adequate number of fresh notes as well as remove the soiled notes from circulation, thereby maintaining the quality of the currency. The topic of the research is to analyze how the Covid-19 pandemic has affected the demand for currency in India. It is mainly a qualitative research, and involves carrying out the literature review of relevant research papers, collecting the authentic data related to the currency in circulation, understanding the factors that have been affecting the demand and also analyzing the trend of the currency in circulation during the pandemic. Additionally, the trend of the total digital payments is also studied to analyze whether it affects the demand for currency and to know how well the digital payment mechanisms are being accepted and used by the public. The research report has been divided into three parts, that is, part A: profile of the organization, that is, the Reserve Bank of India; part B: the main body of the project work which includes the nature of problem, objectives and utility of the study, literature review, methodology of data collection and analysis, context of industry problem, presentation of data, analysis and discussion, conclusion and the recommendations for further action; and part C: the learning derived from the research conducted during the summer internship for a period of two months.