New Delhi: Stepping up their attack on the government on the currency crunch issue, the Opposition on Wednesday alleged the Rs 2,000 notes were introduced only to help hoarders, even as banks asserted that the cash availability at ATMs have improved.
A report from SBI Research, a unit of the government-run banking behemoth State Bank of India, meanwhile pegged the total 'cash shortfall' in the system at about Rs 70,000 crore -- an amount equivalent to a third of the monthly withdrawals at ATMs. Officials asserted that the cash position is improving fast with over 80 percent of 2.2 lakh ATMs now operating normally -- a day after the government admitted that an "unusual" spurt in cash demand had led to many ATMs running dry in several states including UP, MP, AP, Telangana and poll-bound Karnataka.
Senior Finance Ministry officials held video conferencing with public sector banks during which they have been asked to replenish the ATMs with 500 rupee notes. SBI said the cash availability has improved at its ATMs in the last 24 hours, while some other banks including PNB, Canara Bank and Axis Bank maintained the cash shortage was limited to select pockets.
The RBI had on Tuesday sought to allay concerns saying there was no currency shortage in the system and steps were being taken to ramp up printing of notes and to move currency to areas which are witnessing unusually large cash withdrawals. Former finance minister and senior Congress leader P Chidambaram, however, said the "ghost" of demonetisation has come back to haunt the government and the RBI and alleged that the Rs 2,000 notes were printed only to help hoarders.
He also said there was a possibility that people have lost confidence in the banking system due to the "bank scams" and they were not putting their surplus money into the banks. Dismissing the RBI statement that there was no shortage of currency in the system as "unsatisfactory", Chidambaram said if the RBI has printed and supplied sufficient cash, it must explain why there is a shortage.
"I also suspect that RBI seriously miscalculated demand for cash in the post-harvest season. Is it correct that currency in circulation has increased by only 2.75 percent since demonetisation? If so, I maintain that Govt/RBI are not allowing money supply to grow at the same rate as the nominal GDP," he said.
Trinamool Congress leader Dinesh Trivedi asked the government to come out with "real reasons" behind the cash crunch and wondered whether there are plans to discontinue the Rs 2,000 denomination notes. "I feel that the real reason for the cash crunch is because the government has perhaps decided to discontinue the Rs 2,000 denomination currency notes," Trivedi, who is a member of the Parliamentary Standing Committee on Finance, said.
Demanding an immediate statement from the government on "the truth behind the cash crunch", he told PTI that "the people have a right to know and you cannot hoodwink them in a democracy." Cash crunch was reported from Bihar also with majority of ATMs of public and private sector banks there going dry, even as Deputy Chief Minister Sushil Kumar Modi exuded confidence that the situation will be normal soon and people will not have to face problems in getting cash.
Meanwhile, a report from SBI Research analysed nominal economic growth, currency with the public and the rise in digital transactions to peg the total estimated cash shortfall at about Rs 70,000 crore. A 9.8 percent nominal GDP growth would have taken the currency available with the public to Rs 19.4 lakh crore by March 2018, as against the actual availability of Rs 17.5 lakh crore.
The proportion of digital transactions is now estimated at about Rs 1.2 lakh crore, lower than the levels seen after the November 2016 demonetisation decision that saw withdrawal of the then Rs 500/1000 notes and subsequent introduction of Rs 2,000 bills. The apparent shortfall thus could be around Rs 70,000 crore or even less," SBI Research said.
The research report estimated that about Rs 15.29 lakh crore were withdrawn from ATMs through debit cards in the second half of FY18, which is a good 12.2 percent growth over the previous six months. The report also said that a part of the reason why the shortage is being felt could be the introduction and faster-acceleration in printing Rs 200 notes.
"As ATMs have to be replenished more frequently, it can lead to the conjecture that cash is not available," the report added. The RBI has also attributed the shortage to "logistical issues" in replenishing ATMs with cash and recalibrating those to accommodate the Rs 200 notes. The higher level of economic activity in the fourth quarter may have also resulted in more withdrawals at ATMs, SBI Research said.
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