By Ruma Dubey
Fear has come to haunt the hearts of people of India all over again.
The mere mention of ATMs putting up a board saying “No Cash” sends shivers down the spine, bringing back very bad memories.
The memories of demonetization (demon) are still fresh and yet, we now have a new situation where there is no cash – not all over India but in some pockets but this has led to a panic mode where people are once again rushing to ATMs. There are no serpentine queues all over India yet but the fear factor is most certainly in.
The Govt has assured and reassured that there is nothing to worry and everything will be back to normal within a week. But this statement itself causes so much worry! RBI says that it has speeded up the supply of cash and it is ramping up printing of Rs.500 notes. Once again, sounds so much like 2017!
There has been a sudden spike in the need for cash – to the tune of some Rs.43,000 crore compared to average of Rs.25,000 crore. 20% of the ATMs are currently problematic.
Pre-demon, Rs.17.74 lakh cash was in circulation and today, post demon, Rs.18.17 lakh cash is in circulation – doesn’t this also say something about the usage of cash and demon? What has come to light is that 93% of the ATMs should have cash but the ground reality is close to 65%. There are also news reports of cash not being replenished in ATMs for the past 6 days.
Rs.1.75 lakh crore cash reserve is there, nothing to worry – that’s what the RBI has said. But if we have so much cash, why did a mere Rs.17,000 crore spike up lead to this situation then?
So the BIG question is – why this sudden need for more cash? There are various theories. First is that Karanataka is going to polls and that explains the sudden spike in demand for cash – if one may recollect, it was in Andhra Pradesh that ATMs first started to run dry a fortnight ago.
Another major reason being cited is that though RBI has cash in the reserves and has enough to supply, clearly RBI has erred big time when it comes to matching the demand-supply situation.
Making payment for social welfare schemes in cash and payments to farmers going up during the ongoing crop procurement season are also stated to be a reason.
There are other reasons too – festival season so need for cash gone up. But isn’t this a seasonal thing? Why only this year? There is also news of massive hoarding of Rs.2000 notes as they are not seen returning into the system. There is also news that many ATMs are not calibrated for dispensing Rs.2000.
What this means is that demon has been a big failure and cash is still the king. If the purpose of demon was to tackle black money, well, that does not seem to be happening.
For people like me and you, not concerned with the ongoing political slugfest, we can only tell ourselves that standing in queues at ATMs for cash could become the norm. Only, every time this happens, we will never know that real reason why we have to go through this inconvenience to withdraw our own money.
We do not know the reason or whose mistake it was but ATMs running dry in a country as big as India sends the message of India being something like a banana republic. So much so for being the fastest growing economy on earth!
Having said all this, do you need to panic and rush to the ATM? No. It does not look like a crisis situation and things could get back to normal in a short time.
Well, this incident will push more people to hoard cash- all over again.