India's currency in circulation surged over 12% in early April, reaching a record 42.

India's currency in circulation surged over 12% in early April, reaching a record 42.3 trillion rupees as cash demand hits highest levels since 2017 demonetisation. The spike of 610 billion rupees reflects strong rural consumption, lower interest rates, and GST cuts on daily essentials. Economists attribute the surge to increased household spending power and precious metal recycling. However, this sustained cash demand poses liquidity challenges for the banking system. The RBI has maintained surplus liquidity between 0.6% and 1.1% of deposits to support economic activity, but persistent currency circulation growth could pressure this balance. HDFC Bank forecasts liquidity surplus averaging 1% in the first half of the fiscal year, potentially declining to 0.5% later.