With several parts of the country witnessing cash crunch in the recent days, the government on Tuesday said the Reserve Bank will increase five-fold the printing of Rs 500 notes to deal with cash shortages in certain parts of the country.
Cash shortage has been reported from Andhra Pradesh, Telangana, Karnataka, northern Bihar and certain other parts of the country, apparently on apprehensions about the safety of deposits due to recent spurt in banking frauds. Several ATMs in the national capital also saw long queues and soon ran out of cash.
While the Centre has argued that the grim situation is a result of “unusual spurt” in demand for cash, the Opposition left no stone unturned to attack the Prime Minister Narendra Modi-led NDA government over the current crisis.
Finance Minister Arun Jaitley said the “temporary shortage” in certain states is being “tackled quickly” and that there is “more than adequate” currency in circulation. Jaitley said he has reviewed the currency situation in the country. The government is checking with banks and the Reserve Bank of India to ensure adequate supply of currency.
Economic Affairs Secretary Subhash Chandra Garg said that the government will step up printing of Rs 500 notes by five times in order to meet an “unusual spurt” in demand for cash. Observing that there is unusually high demand for currency, Garg said there are multiple factors for this including the tendency to hoard cash and it is stronger in some parts of the country.
Currently, the currency in stock is about Rs 2 lakh crore and the reserves are adequate to meet any unusual spurt in demand, he said.
The Reserve Bank also said there is no shortage of currency in the system even though it has ramped up printing of notes at its four presses. “It is clarified at the outset that there is sufficient cash in the RBI vaults and currency chests. Nevertheless, printing of the notes has been ramped up in all the four note presses,” it said in a statement.
The central bank said shortage “may be felt” in some pockets largely due to logistical issues of replenishing ATMs frequently and the recalibration of ATMs being still underway. “RBI is closely monitoring both these aspects,” the central bank said.
Further, as a matter of abundant precaution, RBI said it is also taking steps to move currency to areas that are witnessing unusually large cash withdrawals.
However, as the ruling dispensation tried its best to defend itself over the current crisis, the Opposition left flayed the central government. While attacking the government, Congress president Rahul Gandhi said that “terror of note ban” has once again gripped the nation. Gandhi accused PM Modi of destroying the country’s banking system owing to the decision of demonetisation. “Modiji’s ‘Mallya maya’, the terror of note ban is again spreading. The country’s ATMs are again empty, what has been done to the country’s banks,” he tweeted.
समझो अब नोटबंदी का फरेब
आपका पैसा निरव मोदी की जेब
मोदीजी की क्या ‘माल्या’ माया
नोटबंदी का आतंक दोबारा छाया
देश के ATM सब फिर से खाली
बैंकों की क्या हालत कर डाली#CashCrunch
— Rahul Gandhi (@RahulGandhi) April 17, 2018
Senior Congress leader P Chidambaram also slammed the government for the cash crunch, saying cash supply had been “arbitrarily reduced”. In a series of tweets, Chidambaram said, as a rule, cash supply must grow at the same rate as the economy is growing and the government was obliged to provide as much cash as people need at any given time.
“A government is obliged to provide as much cash as the people need at any given time. Government or RBI cannot arbitrarily control the supply of cash. If RBI has injected sufficient cash, it is obliged to tell the people why there is a cash shortage,” he said. Chidambaram alleged the cash shortage may be because cash supply had been “arbitrarily reduced”.
CPI (M) leader Sitaram Yechury, while attacking the government, said, “ATMs were empty in November 2016. ATMs are empty now. And the only party flush with cash is the BJP: People suffer.” Referring to the government’s demonetisation decision in November 2016, when the government had announced the withdrawal of the then Rs 500/1000 notes and subsequently introduced new Rs 2,000 notes, Yechury said the country is still paying the price of “a sudden midnight Firman (order) of demonetisation”.
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In a series of tweets, he said the demonetisation did not kill terrorism and it did not kill corruption or fake currency either. “But it has certainly killed the Indian economy. The cash crisis tells us how Modi’s demonetisation disaster is still wreaking havoc,” he added.