Cash crunch: More than adequate currency in circulation, says FM Arun Jaitley

Finance Minister Arun Jaitley on Tuesday said that there is more than adequate currency in circulation and with the banks after acknowledging that there have been reports of cash crunch in may states.

The FM stated that the ministry has reviewed the currency situation and the shortage is caused due to  ‘sudden and unusual increase’ in some areas, which is being tackled quickly.

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

“There has been unusual spurt in currency demand in the country in last three months. In the current month, in the first 13 days itself, the currency supply increased by Rs45,000 crore. This unusual spurt in demand is seen more in some parts of the country like Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh and Bihar,” the Finance Ministry said in a statement.

The Ministry added that both the government and Reserve Bank of India “have taken all steps to meet this unusual demand”.

“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,” the statement read.

The government is taking all steps to ensure that ATMs are supplied with cash and to get non-functional ATMs normalised at the earliest.

"There is no cash crunch or cash shortage in the country right now," Economic Affairs Secretary, Subhash Chandra Garg said in an interview to CNBC TV18, adding that the total currency supply in the country stands at Rs 18 lakh crore compared to the demonetisation levels of Rs 17.5 lakh crore. 

Garg explained that the reserves keep Rs 2.5-3 lakh crore currency to meet unexpected spike in currency demand, adding that the government has ramped up currency printing from 500 crore per day to 2500 crore per day. 

The fear of currency shortage may have led to heavy cash withdrawals, Garg said. 

SBI Chairman Rajnish Kumar  in an interview to CNBC-TV18 backed Jaitley's statement, saying that there is enough currency in circulation.

"Currency in circulation is at Rs 18.29 lakh crore. There is sufficient cash in the system,"Kumar said.

The Centre and the Reserve Bank of India (RBI) have stepped in to tackle the shortage of cash in several states.

"The government has formed state-wise committee and RBI also formed committee to transfer currency from one state to other. It will be done in 3 days," state MoS Finance Shiv Shukla said.

Several areas in Assam, Andhra Pradesh, Telangana, Karnataka, Maharashtra, Rajasthan, Uttar Pradesh and Madhya Pradesh have reported shortage of currency in the past few days. Maharashtra, Bihar and Gujarat have also joined other states in the cash crunch.

People in Varanasi say, 'We do not know what or where the problem is but the common man is facing difficulty as the ATM Kiosks are not dispensing cash. We have visited 5-6 ATMs since morning. We need to pay for the admission of children and purchase groceries & vegetables'. pic.twitter.com/8eSGXU0NtU

— ANI UP (@ANINewsUP) April 17, 2018

 

People in Delhi say 'We are facing cash crunch. Most of the ATMs are not dispensing cash, the ones which are dispensing, have only Rs 500 notes. We are facing difficulty, don't know what to do'. pic.twitter.com/zZoeEfOwjk

— ANI (@ANI) April 17, 2018

Experts believe that the continued cash crunh may force farmers to sell crops at lower prices as they want their payments in cash due to the absence of ATMs for about 25 km, as per a report in DNA.