Fear of uncertainty and the need for petty cash to buy things from nearby grocery stores amid lockdown have made people stack more cash with them. Currency with the public was Rs 22.5 lakh crore at the end of February which started to shoot up from the beginning of March after the news of chaos caused by the coronavirus pandemic across the globe started to come. The currency with the public stood at Rs 24.24 lakh crore in the fortnight ending April 24, which is an addition of over Rs 1.7 lakh crore since March, according to RBI.
As the Narendra Modi-government announced the nationwide lockdown, panic spread among the common people and a steep surge in the cash withdrawal was observed as they started to get ready for the lockdown. Nearly Rs 53,000 crore cash was withdrawn in just 15 days in March.
While lockdown was new to Indians, the uncertainty over how the things will work out forced people to go for panic buying of groceries, other essential items, and hoard cash. In the wake of the situation, PM Modi had also urged the people to refrain from panic buying as there is a sufficient stock of goods and the essential goods will keep on moving
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Meanwhile, India is not the only country where coronavirus-led chaos has made people stack cash. The value of euro banknotes in circulation has also increased by the largest amount since the 2008 financial crisis as Europeans have responded to the coronavirus pandemic by hoarding cash. However, things are gradually coming back to place with more businesses allowed to operate amid lockdown. Lockdown 3.0 is scheduled to get over by May 17, after which economic activities will resume.