Cash crunch: Jaitley tries to soothe frayed nerves

Adequate currency in circulation, temporary shortage to be tackled quickly, says FM

Illustration: Uttam Ghosh/Rediff.com

Several parts of Andhra Pradesh, Telangana, Madhya Pradesh, Bihar and poll-bound Karnataka have reported shortage of currency and ATMs running down, which the government on Tuesday attributed to unusual spurt in demand in last three months.

Finance Minister Arun Jaitley said the "temporary shortage" in certain states is being "tackled quickly" and that there is "more than adequate" currency in circulation.

Jaitley, who has been away from office since April 2 due to kidney ailment, said he has reviewed the currency situation in the country.

"Overall there is more than adequate currency in circulation and also available with the Banks. The temporary shortage caused by 'sudden and unusual increase' (in demand) in some areas is being tackled quickly," he said in a tweet.

The government is checking with banks and the Reserve Bank of India to ensure adequate supply of currency.

A statement by the finance ministry confirmed reports of cash shortages and some ATMs running dry of cash or becoming non-functional in some parts of the country.

"There has been unusual spurt in currency demand in the country in last three months," it said.

While currency supply increased by Rs 45,000 crore in the first 13 days of April, "unusual spurt in demand" was seen more in some parts of Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh and Bihar, it said.

Minister of State for Finance Shiv Pratap Shukla said the government has formed a committee to address the problem of currency shortage in certain states and the issue would be resolved in next 2-3 days.

"The government has set up state-wise committee and RBI has also formed a committee to transfer currency from one state to other because for money transfer you need the permission of the RBI. It (the shortage) will be solved in 2-3 days," he said.

RBI report shows that the currency in circulation in the country has reached the pre-demonetisation level of about Rs 17 lakh crore.

"The Government of India with the 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," the finance ministry statement said.

"We continue to have in stock adequate currency notes of all denominations, including of Rs 500, Rs 200 and Rs 100 to meet any demand," it added.

The government said there has been adequate supply of currency notes to meet entire demand.

"The government would also like to assure that it would be supplying adequate currency notes to meet even higher levels of demand if such demand were to continue in the coming days/months."

Also, steps are being taken to ensure that ATMs are supplied with cash and non-functional ATMs normalised at the earliest.

SBI chairman Rajnish Kumar said it would not be correct to state that there is a currency shortage in the country.

There has been an "imbalance" due to the crop procurement season, when demand for currency goes up.

He said Punjab, Madhya Pradesh and Uttar Pradesh are seeing heightened demand due to procurement season.