Millennium Post

Demonetisation déjà vu

After more than a year of the note-ban, ATMs are once again without cash. People are queuing up in front of the few ATMs which are still dispensing the precious notes. It is strangely reminiscent of the post note-ban crisis when the entire country faced an extreme shortage of currency notes for months together. At least 10 states including Madhya Pradesh, Bihar, Jharkhand, Delhi, Andhra Pradesh, Telangana, Karnataka, Gujarat and Maharashtra are facing an acute shortage of cash. Other states too have begun witnessing the problem. The Finance Ministry has said that for the last three months, the demand for cash has doubled. People are withdrawing more money and they are not depositing the high denomination notes of Rs 2,000. There are doubts that some individuals may be hoarding the high-value currency notes. In the first 13 days of April, the withdrawal of cash shot up by five times the usual. The government has said that it has directed the printing facilities where currency notes are being printed to increase the printing of Rs 500 currency notes by five times. In Surat, the banks have capped the withdrawals at Rs 50,000. In Bihar, the supply of currency notes is only 35 per cent the demand. In Jharkhand, more than 50 per cent of the ATMs are without cash. In Madhya Pradesh, the difference between withdrawal and deposits is Rs 700 crore. And, in Delhi, ATMs in posh localities have cash while those in crowded areas do not have any cash.
The monthly cash withdrawal in the country remains at Rs 20,000 crore. But, since January, the demand for cash has doubled. From January to March, Rs 40,000 to Rs 45,000 crore have been supplied to the banks every month. This has resulted in the drop in cash reserves. Normally, a cash reserve of Rs three lakh crore is maintained but this has come down to Rs 1.75 lakh crore. In the first 13 days of April, Rs 45,000 crore had been withdrawn from the banks. In general, Rs 18 lakh crore is in circulation. Out of this, Rs 6.7 lakh crore is available in the Rs 2000 denomination. The people, apparently, are not returning the Rs 2,000 notes. The printing of Rs 2,000 notes has also been closed. If the ATMs are stocked with Rs 2,000 notes, they can accommodate up to Rs 60 lakh; but, in the case of notes of lower denomination, the ATMs can stock only up to Rs 15 to Rs 20 lakh. Only 30 per cent ATMs are calibrated for Rs 200 notes. The demand for cash has increased because of the ongoing marriage season. The RBI maintains that it has a sufficient stock of currency notes. Some states are also facing the problem because of logistical reasons. Further, some ATMs are running with low cash as the process of recalibration is continuing. However, the printing of currency notes has been sped up at all four note printing facilities in the country. Authorities are suspecting that people are hoarding the Rs 2,000 notes. To meet the situation, the government has asked the printing press to increase the printing of Rs 500 notes by five times.
Reacting to the news of the cash shortage at ATMs, West Bengal Chief Minister Mamata Banerjee has said that the development reminds her of the demonetisation days. "Seeing reports of ATMs running out of cash in several states. Big notes missing. A reminder of #DeMonetisation days. Is there a Financial Emergency going on in the country?" she said in a tweet. Congress president Rahul Gandhi has said that the Narendra Modi government has destroyed the banking system by imposing a note ban and unleashing its terror in the country. He also flayed the PM for allowing people like Nirav Modi to escape from the country even after defrauding the banks to the tune of Rs 30,000 crore. He accused the Prime Minister of not speaking on various banking scams that have come to notice in the recent months. "We were forced to stand in queues as he snatched Rs 500- Rs 1,000 notes from our pockets and put it in Nirav Modi's pocket," he said.
Union Finance Minister Arun Jaitley has said that there is more than the adequate currency in circulation and the shortage of cash being faced by some states will be quickly tackled. "Overall, there is more than adequate currency in circulation and also available with banks. The temporary shortage caused by the 'sudden and unusual increase' (in demand) in some areas is being tackled quickly," he assured.
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