A study by an industry body has revealed that Rs 500 currency notes account for almost 46% of all bank notes in circulation in India, followed by Rs 1,000 notes at 39.3%, indicating the purchasing power of currency notes in the country.
The Associated Chambers of Commerce & Industry of India (Assocham) study has also found that Rs 100 notes account for only 10.5% of the overall circulation of currency notes, as of March 2015.
Among smaller denominations, the circulation of Rs 20 notes fell to 0.6% in March 2015 compared to 5.2% in March 2013, while Rs 50 notes' circulation stood at 4.7%.
"The cost of living has gone up so much in the last few years that smaller notes do not fetch you the kind of goods, services that could be bought not in the distant past. What is notable is that these notes have lost a huge value in the last two and half years," PTI quoted Assocham Secretary General D S Rawat as saying.
While the circulation of Rs 500 notes surged from 14.6% in March 2013 to 46% March this year, the Rs 1,000 notes saw a sharp increase to 39.3% in their circulation from just 5.9% in March 2013.
"Today, a home maker does not step out of the house with less than Rs 500 in case she wants to make basic purchases like daily vegetables, some atta or loose cooking oil when it comes to labour strata," the study said.
"For the middle class, the Rs 500 note is just about commuting expenses, tea, coffee in office. For buying vegetables and fruits and milk and some breads, eggs, etc Rs 1,000 note is a must," it added.
Circulation of Rs 10 notes has almost given way to coins. Among coins, Rs 5 is the most demanded one with a share of 33% in overall coin circulation, followed by Rs 2 at 27.8%.