Responding to reports of ATMs running dry, sparking fears of a cash crunch, Finance Minister Arun Jaitley, on Tuesday, 17 April, said that the shortage was caused due to “sudden and unusual” demand in currency. He assured that it was a “temporary” situation and was being “tackled quickly”
Reminiscent of the days following the demonetisation move announced by the Narendra Modi government in November 2016, non-availability of cash in ATMs have been reported in several states, including poll-bound Karnataka, Andhra Pradesh, Telangana, Uttar Pradesh, Madhya Pradesh and Maharashtra. The national capital Delhi too has reportedly been hit by the cash crunch.
“The level of cash, according to the central bank, is now close to the pre-demonetisation level at Rs 18.4 lakh crore as of 6 April. But in terms cash-to-GDP ratio, it’s still lower at 10.9 percent compared to 12 percent before the note ban,” reported BloombergQuint.
The Ministry, in a statement, said that the first 13 days of the month saw Rs 45,000 crore increase in the supply of currency but assured that the government has adequate stock to meet the demand in the coming days.
We had adequate reserves of currency notes which have been used to meet fully the extraordinary demand generated so far. We continue to have in stock adequate currency notes of all denominations, including of Rs 500, 200 and Rs 100 to meet any demand.Finance Ministry Statement
The ministry said that the government was taking all steps to ensure that ATMs are supplied with cash and to get non-functional ATMs normalised at the earliest.
The current shortage is related to local demand and supply, R Gandhi, former deputy government of the Reserve Bank of India, told BloombergQuint. “Currency demand depends on occasions such as elections, festivals where we see a spike. Also, when state and central governments pay out their social welfare schemes in currency, there’s a spike.”
Gandhi said the pockets of surplus and deficit are managed through transferring currency.
SP Shukla, minister of state for finance, reiterated: “The government has formed state-wise committee and the Reserve Bank of India also formed a committee to transfer currency from one state to another.”
Another reason for the cash shortage is that payments to farmers have gone up during the ongoing procurement season, Rajnish Kumar, Chairman of the State Bank of India, the country’s largest lender, told ANI.
“In the next week, things will start coming back to normalcy. This is not new. The RBI has been given an indent to increase the flow of Rs 500 notes.”
Banking Secretary Rajiv Kumar told BloombergQuint that the shortage of Rs 500 notes will remain for five to seven days. “The government has stepped up supply.” More than 85 percent of ATMs are operational and only 10-12 percent have faced the crunch, he said.
(With inputs from BloombergQuint, ANI)
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)