At a time when crucial elections are approaching, another instance of currency shortage has hit the nation. This time, Automated Teller Machines (ATMs) across the country have run out of cash. Government officials are ambiguous in the assurances and explanations. Prime Minister Narendra Modi is on a foreign trip to Sweden and UK and has not commented on the situation yet.
The phenomenon becomes important in the light of demonetisation move that BJP government had done in November 2016. With no prior notice, PM Modi had gone on TV to tell the people of the nation that from that night of November 8, notes of 500 and 1000 rupees would not be valid. The decision had resulted in many deaths and the citizens were deprived of cash for many weeks. Stock indices fell and Indian economy was threatened in the days that followed and the public was spending hours in queues outside ATMs every day.
With this history, the sudden widespread cash shortage that has struck many states in the country at the same time has set off alarm bells. Speculation is high and the assurances from the government do not seem to be convincing for a large group of people who view the move with suspicion.
Sanjeev Sanyal, Principal Economic Advisor in the Finance Ministry said that there was no need to panic and that the shortage was due to a spike in the demand. There seems to be no explanation for the cause of the increase in demand except the high demand for cash during Baisakhi, Bihu and other harvest season festivals across the country. Citizens find it hard to believe this as these festivals happen every year and no such shortage has occurred in the past during the season.
Finance Minister Arun Jaitley assured that the problem will be ‘tackled quickly,’ but was silent on the further steps. It was a month ago that Reserve Bank of India (RBI) disallowed banks from moving excess cash in one circle to deficient circles. This has resulted in many circles having a surplus amount of money while others do not have enough to meet the demand. But this does not explain the cash shortage that is spread across many states including Andhra Pradesh, Bihar, Gujarat, Assam, Karnataka, Maharashtra, Rajasthan, Uttar Pradesh, Madhya Pradesh and Telangana now.
SP Shukla, Minister of State for Finance asked the public to wait for three days till the problem was solved. He said that the government intended to transfer cash from states that had the cash to those that didn’t.
Various state governments have asked the centre help them tackle the issue. The Manipur government wrote a letter to the finance ministry apprising them of acute shortage of cash in the state, Business Standard reported. Four days ago on April 13, 2018, Gujarat deputy chief minister Nitin Patel had said that the government was in touch with RBI to solve the cash scarcity issue in the state.
On Monday, April 16, 2018, Madhya Pradesh Chief Minister Shivraj Singh Chouhan said that Rs 2,000 notes were vanishing from the market. He was of the opinion that it was part of a conspiracy. ‘This is also a conspiracy… so that troubles start. Once the trouble starts, (conspirators) play mischief,’ he said at a gathering of farmers in Indore.
Various political parties across the affected states and others have reacted in strong words in the present situation. Congress President Rahul Gandhi connected the Nirav Modi scam to the current shortage of cash. He said that the PM had destroyed the banking system and was helping businesspeople like Nirav Modi flee the country with people’s money. ‘Nirav Modi fled with Rs 30,000 crore and PM didn’t utter a word. We were forced to stand in queues as he snatched 500-1000 rupee notes from our pockets and put in Nirav Modi’s pocket,’ he said.
West Bengal Chief Minister Mamata Banerjee asked on social media if there was a ‘Financial Emergency’ going on in the country. More politicians felt that the cash crunch was related to the upcoming elections, particularly the one in Karnataka. Prasanth Bhushan, lawyer and Public Interest Litigation (PIL) activist said on Twitter, ‘Cash crunch temporary,’ says Jaitley, as ATMs run dry. Perhaps he knows that the cash will return after Karnataka polls. BJP is spending thousands of Crores & crunching on cash there.’
The Karnataka Legislative Assembly elections are slated to happen on 12 May 2018 in all 224 constituencies.
Sitaram Yechury, Secretary General Communist Party of India (Marxist) CPI(M) said, ‘This govt which still has not been able to count the demonetised currency is asking us to trust its Jumla (fake claims) 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.’ He lashed out against BJP saying that the Modi government had killed Indian economy.
ATMs were empty in November 2016. ATMs are empty now. And the only party flush with cash is the BJP: the people suffer.
— Sitaram Yechury (@SitaramYechury) April 17, 2018