Q. Consider the following:
- Growth rate of the economy
- Replacement demand
- Reserve stock requirements
- Budget Allocations to various department
Which among the above are used by RBI to estimate the demand for banknotes?
Answer:
1, 2 & 3
Notes:
- Growth rate of the economy - Higher GDP growth requires more currency in circulation.
- Replacement demand - Old, soiled banknotes need to be replaced regularly.
- Reserve stock requirements - RBI needs to maintain an adequate reserve stock for distribution.
- Budget Allocations to various departments - This does not directly impact banknote demand.