An extra Rs 60,000 crore is in circulation thanks to the state elections, says Raghuram Rajan
While he did not specify what he thought they were, the RBI Governor said that the reasons for the huge surge need to be examined.
Reserve Bank of India Governor Raghuram Rajan on Tuesday noted that an extra Rs 60,000 crore was being circulated in the country because of upcoming state elections. After announcing the first bi-annual monetary policy of the financial year, Rajan said the public held around Rs 50,000 to 60,000 crore more money than usual now, and that around election time, the amount of cash with the public increases. “You can guess the reason why. We can also guess,” he said.
Rajan also said the surge in currency being circulated was not restricted to the states headed for elections, but in neighbouring states as well. PTI reported that Rajan said this was “not normal”, and that it needed to be looked into so that it can be understood better. The report added that according to data released by the RBI, for the fortnight ending March 18, there was a 48% increase in cash circulation at Rs 2 trillion.
The Times of India has said that up to Rs 32 crore has been seized from states headed to polls, as of March 30. Elections will end after Tamil Nadu and Kerala have voted on May 16.