Cash Crunch in India

Government needs three days to fix the problem

ATMs in different cities across the country are reportedly running dry. This problem has affected both, start-run and private bank ATMs. Such is a situation in cities and towns across Karnataka, Maharashtra, Madhya Pradesh, Rajasthan, Andhra Pradesh, Uttar Pradesh and Telangana. One reason could be that the cash withdrawals at certain branches and ATMs are higher than the deposits made at those branches.

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Finance Minister Arun Jaitley assured the customers that the government will resolve the problem quickly. Minister of State for Finance, SP Shukla stated that the Centre will need three days to fix the problem. Many states faced cash shortages despite the fact that the flow of currency is now at the pre demonetization level. As on 6th April 2018, the currency on circulation was INR 18.17 lakh crore, as per RBI data. It was also found in an analysis by the RBI that the rate of cash withdrawals was more than cash deposits at banks in the above mentioned states.

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Jaitley stated that there was more than enough currency in the system and in the Banks. However, he acknowledged the shortage and added that this was temporary and probably caused due to the sudden and unusual rise in some areas. It is being tackled currently. The reports of shortage currency started in Telangana and Andhra Pradesh a few weeks back. Now there are similar reports coming from Maharashtra, Gujarat and Bihar. The growth in currency has been almost flat but the need for currency has shrunk due to the increased level of digitization.