Barely had the people recovered from the spectre of demonetisation that struck the country on the November 8, 2016, that cash crunch is back to make life in Narendra Modi's India a tad bit more difficult. Adding to the problem, perhaps, is the eeriness around the reasons for why ATMs have suddenly gone dry and banks are cash-starved.
States, including Maharashtra, Andhra Pradesh, Telangana, Gujarat, Rajasthan, Uttar Pradesh, Madhya Pradesh and Manipur have reported cash shortage. Poll-bound Karnataka too has found itself wanting for cash.
What's more, the national capital also doesn't have enough cash to keep ATMs running.
Interestingly, this cash crunch has caught the government just as unaware as the masses, leaving people wondering about who controls the cash flow in India.
Finance minister Arun Jaitley has attributed the situation to a "sudden and unusual increase" of cash in "some areas". Which areas? Poll-bound areas? Why? Nobody is answering that as of now. Jaitley has also hinted at an "unusual spurt in demand" for cash as a reason for the problem. But nobody is clearing the air on what could have caused the "unusual spurt".
Have reviewed the currency situation in the country. Over all there is more than adequate currency in circulation and also available with the Banks. The temporary shortage caused by ‘sudden and unusual increase’ in some areas is being tackled quickly.— Arun Jaitley (@arunjaitley) April 17, 2018
Minister of state for finance, SP Shukla, said: "We have cash currency of Rs 1,25,000 crore right now. There is one problem, some states have less currency and others have more. The government has formed a state-wise committee and RBI too has formed a committee to transfer currency from one state to other. It will be done in three days."
Madhya Pradesh chief minister Shivraj Singh Chouhan, meanwhile, has alleged a conspiracy in the development. Chouhan said, "The currency worth Rs 15,00,000 crore was in circulation before demonetisation. After this exercise (demonetisation), the currency in circulation increased to Rs 16,50,000 crore. But notes of Rs 2,000 are missing from the market." Adding, "Where these notes of Rs 2,000 denomination are going, who are keeping them out of circulation? Who are the persons creating shortfall of cash? This is a conspiracy to create problems. The government will act tough on this."
And the Opposition is in no mood to let go of the opportunity to corner the government on the latest crisis.
If the Congress president is to be believed, the missing cash has been pocketed by diamantaire Nirav Modi, who left the country after allegedly defrauding the country of over Rs 11,000 crore. Rahul said the current crisis was a result of the rot in the banking system.
समझो अब नोटबंदी का फरेबआपका पैसा निरव मोदी की जेब मोदीजी की क्या ‘माल्या’ मायानोटबंदी का आतंक दोबारा छायादेश के ATM सब फिर से खालीबैंकों की क्या हालत कर डाली#CashCrunch— Rahul Gandhi (@RahulGandhi) April 17, 2018
"Modi ji has destroyed the banking system. Nirav Modi fled with Rs 30,000 crore and prime minister didn't utter a word," the Congress leader said.
The Congress party and some of its leaders separately led the charge on Modi for the cash shortage in a tweet.
News reports say that ATMs around the country are running of out cash. Is it just gross mismanagement by the Modi Govt or is this a deliberate move? #IndiaSpeaks— Congress (@INCIndia) April 17, 2018
As the ATMs across the country go dry, people are in trouble because of shortage of currency … Modi government has ruined the Banking system of the country and People have lost their faith in it. #CashCrunch— Ashok Gehlot (@ashokgehlot51) April 17, 2018
The BJP's ardent critic and West Bengal chief minister Mamata Banerjee, meanwhile, insinuated at a "financial emergency" in her tweet.
Seeing reports of ATMs running out of cash in several States. Big notes missing. Reminder of #DeMonetisation days. Is there a Financial Emergency going on in the country? #CashCrunch #CashlessATMs— Mamata Banerjee (@MamataOfficial) April 17, 2018
Joining in the attack was CPM leader Sitaram Yechury.
This govt which still has not been able to count the demonetised currency is asking us to trust its Jumla that there is no cash crunch. After the demonetisation disaster where goalposts were repeatedly shifted and deadlines changed, no one trusts the Modi government anymore.— Sitaram Yechury (@SitaramYechury) April 17, 2018
But Opposition leaders aren't the only ones to take on the government over the issue.
Crisis after crisis. Just when the Modi government was recovering from the involvement of BJP leaders in rape cases, comes another controversy. Cash has disappeared from ATMs in many states, reminding people of the failure of demonetisation. https://t.co/oZ4Nl0rgsG— Shivam Vij (@DilliDurAst) April 17, 2018
Dear Finance Minister,Cashless Economy does not mean Cashless Banks and Cashless ATMs.We hope you understand. ????#CashCrunch #CashlessATMs— Kanhaiya Kumar (@kanhaiyajnusu) April 17, 2018
Some also alleged that this could be a move to starve the Opposition of cash right before an important election year.
#CashCrunch. Gov’s sundry reasons but were they again fiddling to 1. Reduce ₹2000 notes to counter BlackMoney & got supply-demand wrong; 2. People hoarding cash & there’s a run on ATMs; 3. Gov preparing for snap LokSabha Elec & sucking out cash2 starve opposition?— K. C. Singh (@ambkcsingh) April 17, 2018
Quite possible!! Or may be de-monitizing ₹2000? We should be ready for one Big shock before next General Elections and countdown has started for that long back....— Amol अराणके (@amolaranke) April 17, 2018
Where is the cash?
The current development is all the more shocking given that there actually is more cash in circulation in the country today than in pre-demonetised India. The total currency in circulation currently is over Rs 18 trillion as opposed to Rs 17.97 trillion just before demonetisation. The obvious question then is why ATMs and banks are short on cash.
ATM recalibration and phasing out of Rs 2,000 notes
One reason could be that since all the 2.2 lakh ATMs have not been recalibrated to dispense the new Rs 200 and Rs 50 notes, while at the same time Rs 2,000 notes are being phased out, cash is finding it difficult to make its way to the people.
However, the fact that Rs 2,000 notes are being phased out is also part of speculation since no official statement regarding the same has been issued leaving it all to conjecture.
There are also speculations around stressed banks trying to cut on cost by cutting down on cash vans, which is in turn aggravating the problem.
Reports suggest that the various festivals like Baisakhi, Bihu and other harvest festivals might have pushed the demand for cash in the states.
Since it has been a practice to hoard cash before any election to meet huge campaign expenses, there has been a rise in demand for cash in Karnataka, which goes to polls on May 12.
There are some reports suggesting that the demand for smaller denomination is also higher due to the larger amount needed to pay harvest season wages.
But this lack of clarity is also adding to anxieties for people for whom the memory of those hours-long wait in serpentine queues to reach the ATM for cash is still fresh.