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April 2017: Earliest India Will Get Its Cash Back

Sahil Kini,
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We are 17 days away from Prime Minister Narendra Modi’s 50-day deadline to end the worst effects of the scrapping of 86%–by value–of India’s currency. In the chest-thumping, hand-wringing and controversy that has ensued since the announcement on November 8, 2016, there has been an absence of facts on the question of re-monetising India.


An extrapolation of 2016 Reserve Bank of India (RBI) data on the capacity of Indian printing presses and currency distribution indicates that, at current rates, the Prime Minister’s deadline will not be met. Getting adequate money to banks and ATMs nationwide will depend on how many bank notes the government wants to put back into circulation.


If the government wants to introduce Rs 9 lakh crore ($135 billion)–or 35% less money than it pulled out–it will take up to May 2017, and if it wants to reintroduce the entire Rs 14 lakh crore ($210 billion) that it withdrew, that could take up to August 2017.


The crux of the problem is change, specifically the Rs 500 note, which India’s presses cannot, currently, print in adequate number.


Here are the facts:


  • The RBI has four presses at: Dewas (Madhya Pradesh), Nashik (Maharashtra), Salboni (West Bengal), and Mysuru (Karnataka).
  • The printing capacity of these presses is roughly 2,670 crore (26.7 billion) notes a year, according to the RBI’s 2016 annual report (page 90). Or roughly 7.4 crore (74 million) notes a day.
  • If the presses worked three shifts a day instead of two, their daily production capacity could be raised to 11.1 crore (111 million) notes a day.
  • However, less than half of the machines in the presses have the ability to print the security features required for high-value notes (Rs 500 and above).
  • This means that even if all the machines that print high-value notes in all four presses printed only Rs 500 rupee notes 24 hours a day, we would at best be able to print 5.56 crore (55.6 million) Rs 500 notes every day.
  • This translates to about Rs. 2,778 crore ($418 million) in value printed every day in Rs 500 notes.

Before the announcement of demonetisation, the government had already arranged for the printing of 200 crore (2 billion) Rs 2,000 notes, or roughly about Rs 4 lakh crore ($60 billion) in value. So, these were the first set of notes to be circulated. This is why there are so many pink notes in circulation.


Let’s explore the time to disburse in the two scenarios we mentioned:


  • Scenario 1: Rs 9 lakh crore (or roughly two-thirds the total Rs 14 lakh crore that was demonetised) needs to be returned to the system.
  • Scenario 2: Rs 14 lakh crore (full amount) needs to be recirculated

For this amount to be liquid, a key condition needs to be met: Rs 2,000 notes can, at most, account for half the total amount to be circulated. The logic: If we do not have enough change, then the Rs 2,000 note will always be hard to “break” into smaller denominations, which is the situation nationwide today.


The other half needs to be available in lower-denomination notes. The total value of Rs 100, Rs 50, Rs 20, and Rs 10 notes is Rs 2.19 lakh crore ($33 billion), according to the RBI’s annual report.


If we put this in a math equation where t is the total value of Rs 2,000 notes and f is the total value of Rs 500 notes, we end up with this equation:


total value of 2,000s (t) = total value of 500s (f) + total value of 100s and below




t = f + Rs 2.19 lakh crore


This means the requirement of Rs 500 notes is as follows:


  • In Scenario 1 (Rs 9 lakh crore disbursal):
    t+f = Rs 9 lakh crore Solving for f,  the value of Rs 500 notes needed is 681 crore (6.81 billion) notes X Rs 500 = Rs 3.405 lakh crore
  • Scenario 2 (Rs 14 lakh crore disbursal):
    t+f = Rs 14 lakh crore Solving for f, the value of Rs 500 notes needed is 1,181 crore (11.81 billion) notes X Rs 500 = Rs 5.905 lakh crore


As on November 30, 2016, less than 10 crore (100 million) Rs 500 notes were printed and ready (or two days worth of printing), according to an RBI source, quoted in Mint.


We arrive at the crux of the problem: India needs to print at least 681 crore (6.81 billion) Rs 500 notes. In Scenario 2, the Rs 500 requirement is for 1,181 crore (11.81 billion) notes. However, the peak printing capacity of the presses is 5.56 crore (55.6 million) notes a day–or 0.8% of what it should be.


At this rate, we will take anywhere between 122 days and 212 days to print enough Rs 500 notes. Given the fact that the RBI started printing Rs 500 notes in earnest after November 30, 2016, printing all the required 500s will be completed only on March 10, 2017 (Scenario 1), or July 8, 2017 (Scenario 2).


Taking into account the time taken for cash transportation and the speed at which banks can push out the money, calculations indicate that complete disbursal of Rs 9 lakh crore can happen in early April 2017.


Note: BC = Banking Correspondents. India has more than 120,000 banking correspondents who cater to the rural areas. It is assumed that all correspondents will be pressed into action in the rural areas.


In Scenario 2 (Rs 14 lakh crore), it could take until mid-July for the cash to be fully disbursed.


Note: BC = Banking Correspondents. India has more than 120,000 banking correspondents who cater to the rural areas. It is assumed that all correspondents will be pressed into action in the rural areas.


In other words: India awaits some “April showers” but a full “monsoon” will have to wait until July.


Addendum (uploaded on December 14, 2016):


Cash disbursal in the market is slowing when compared to the figures projected in the model above. The data so far:


Source: Reserve Bank of India; Business Standard


Update: The headline of this story has been changed to accurately reflect the re-monetisation timeline.


(Kini, a B Tech from IIT Madras, is a Principal at Aspada, a venture capital firm that supports entrepreneurs building businesses for India’s underserved markets. He is also an active volunteer with the IndiaStack, where he helps frame policy, while evangelising its impact at various industry events.)


We welcome feedback. Please write to respond@indiaspend.org. We reserve the right to edit responses for language and grammar.



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  1. Ankur Shrivastava Reply

    December 14, 2016 at 1:41 pm

    B Tech from IIT Madras doesn’t have wit to understand that it is a move to go digital. Not to just change currency notes.

    There are people and cities that can be digitalised, not to a very large extent, but at least to some extent.

    Then, there won’t be the need to print these currency notes.

    • UC Reply

      December 20, 2016 at 3:56 pm

      आरबीआई के मुताबिक,

      पांच दिसंबर तक 3 लाख 81 हजार करोड़ रुपये बंटे.

      जबकि 10 दिसंबर तक 4 लाख 61 हजार करोड़ रुपये बंटे.

      यानी 5 दिनों 80 हजार करोड़ रुपये बांटे गए.

      एक दिन का हिसाब 16 हजार करोड़ रुपये हुआ.

      अगर इसी रफ्तार से बाजार में नोट आए तो 31 दिसंबर तक 16 हजार करोड़ के हिसाब से 3 लाख 36 हजार करोड़ रुपये बांटे जाएंगे.

      दस दिसंबर तक के 4 लाख 61 हजार करोड़ और 10 से 31 दिसंबर के बीच के 3 लाख 36 हजार करोड़ रुपये मिला दें तो कुल राशि 7 लाख 97 हजार करोड़ रुपये हो जाएगी.

      नोटबंदी के वक्त 15 लाख 44 हजार करोड़ रुपये के 500-1000 के नोट बंद हुए थे. अगर हालात सामान्य होने के लिए इसी मुद्रा को आधार माना जाए और हर दिन 16 हजार करोड़ के नोटों की सप्लाई मानी जाए, तो 31 दिसंबर के बाद 47 दिन और लगेंगे यानी 16 फरवरी तक 15 लाख 49 हजार करोड़ रुपये के नोट बाजार में आ जाएंगे. जो बंद हुए नोटों की कीमत से ज्यादा है.

      हालांकि, ये स्थिति तब है जब 2,000 के नोट ज्यादा छपे हैं और 500 के नोट कम. हाल के दिनों में 500 के नोटों की छपाई बढ़ी है. यानी कम पैसे मार्केट में आएंगे. और टारगेट पूरा करने में और ज्यादा वक्त लग सकता है.

      नासिक प्रेस में हर महीने 21 करोड़ पीस नोट, देवास प्रेस में हर महीने 45 करोड़ पीस नोट, शालबनी प्रेस में हर महीने 120 करोड़ पीस नोट, मैसूर प्रिंटिंग प्रेस हर महीने 100 करोड़ पीस 500 के नोट छप रहे हैं.

      हर महीने चारो प्रेस से 286 करोड़ पीस 500 के नोट छप रहे हैं यानि कुल 1 लाख 43 हजार करोड़ मूल्य के 500 के नोट छप रहे है.

      यानि प्रति दिन 4767 हजार करोड़ रुपए के 500 के नोट आएंगे.

      अगर 1 जनवरी से सिर्फ 500 के नोट मार्किट में आये, तो बचे हुए 7 लाख 47 हजार करोड़ रुपए को पूरा करने में 157 दिन लगेंगे. 157 दिन X 4767 हजार करोड़ रुपए =748419 लाख करोड़ रुपए.

      31 दिसंबर तक 7 लाख 97 हजार करोड़ रुपये+1 जनवरी से 6 जून तक 7 लाख 48 हजार करोड़ रुपए = 15 लाख 45 हजार करोड़ रुपए.

      यानि 6 जून तक पूरे 15 लाख 44 हजार करोड़ रुपए बाजार में आ जायेंगे.

  2. Balaji Reply

    December 14, 2016 at 1:58 pm

    Could you please confirm on what basis you have assumed t will be equal to f? Or is there any necessity that t & f should be equal? If the relation changes, so does the projection. I await your reply.

  3. Jayant Upadhyay Reply

    December 14, 2016 at 8:41 pm

    Does the first equation hold true ?
    t = f + Rs 2.19 lakh crore

    Any sources? Was this being satisfied before demonetisation as well?

  4. Sumetee Pahwa Gajjar Reply

    December 14, 2016 at 11:22 pm

    Isn’t the current hardship through shortage in number of smaller denomination notes by design to help people switch from cash-based transactions to cashless transactions?

    It is possible that by April 2017 not even 65% of the cash that was pulled in will need to be re-introduced or re-monetised.

    In my humble opinion, this was never a mathematical exercise, with regards to when the currency can be fully or partially replaced.

    It is an exercise to reduce notes in circulation, in perpetuity.

  5. Satbir S. Kadian Reply

    December 15, 2016 at 6:21 am

    Brilliant analysis Kini.

    As I happen to share similar educational background with you, the analytical job you have done is awesome.

    Other factors in the equation will also impact the scenario.

  6. Tom Reply

    December 15, 2016 at 11:28 am

    I think some of the maths here is inaccurate. If you take the writers starting numbers it would take about 50 days to print Rs 14 lakh crore.

    Rs 1400,000,000,000 divided by Rs 500= 2800,000,000 500 rupee notes.

    At the printing rate of 55,600,000 notes per day, it would take 50 days to print the required 2800,000,000 number of notes.

    The writer may be multiplying when he should be dividing.

  7. Jack Reply

    December 15, 2016 at 2:28 pm

    The author has conveniently neglected to mention that all notes need not be returned to circulation. In fact, the more digital transactions there are, fewer the number of currency notes that need to be in circulation.

    As the government is promoting cash-free digital transactions, less notes are required and the system will return to normalcy much sooner.

    Too many experts are attempting to mislead people. Please read and then think for yourself, then you will see how the truth is being twisted and bent…

  8. Nodnat Reply

    December 17, 2016 at 12:14 pm

    And why would Mr Modi disagree with this analysis? and go on saying something else?

    Because these and such things are not read or accessible to the Bharat that matters.

  9. FollowUp Reply

    January 30, 2017 at 2:32 pm

    Any update on this calculation based on recent data?

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