Cash crunch crisis: “Is there a financial emergency?” Limit ‘imposed’ on withdrawal from ATMs

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Indians up and down the country have now reported that they were facing severe cash crunch, similar to the one they were forced to witness in the days immediately after Prime Minister Narendra Modi announced the shock demonetisation in November 2016.

cash crunch
Photo: Tweeted by journalist Ashutosh Mishra

People in several states including Madhya Pradesh, Telangana, Andhra Pradesh, Dellhi, Bihar, Uttar Pradesh, Maharashtra and Gujarat have shared their woes on not being able to get access to their own money because the ATMs had stopped dispensing money.

West Bengal Chief Minister asked if the country was witnessing a ‘financial emergency.’ She tweeted, “Seeing reports of ATMs running out of cash in several States. Big notes missing. Reminder of #DeMonetisation days. Is there a Financial Emergency going on in the country?”

Union Finance Minister Arun Jaitley took to Twitter to confirm that the country was indeed facing a cash crunch but sought to assure the public that the crisis was only temporary. He, however, did not explain as to what had caused the crisis to unfold in such magnitude. He wrote, “Have reviewed the currency situation in the country. Over all there is more than adequate currency in circulation and also available with the Banks. The temporary shortage caused by ‘sudden and unusual increase’ in some areas is being tackled quickly.”

Meanwhile, a journalist working for India Today Group, visited several and found that while most of ATMs had stopped dispensing cash, others had imposed a limit on the amount to be withdrawn. One ICICI bank ATM was seen dispensing only Rs 4,000. The last time such restriction was imposed was immediately after the note ban was declared on 8 November 2016.

Prime Minister Narendra has already left the country for a three-nation tour. Social media users have begun mocking the prime ministers for his decision to leave the country even amidst an unprecedented crisis.

3 COMMENTS

  1. as current account defecit asrisen there is shortage of monetary exchange unit. as imports are nothing but leakage from the system. in past there was enough cash in circulation shortage was never felt. cash as percentage of gdp was 30% during vajapee era has now fallen to 10% of gdp during modi period. it also indicates massive failure of rbi and finance ministry. basic function of central govt is to provide adequate monetary exchange unit both cash as well as bank money.shotrage of money was compenstaded by extra rotation of cash but as it has fallen below 10% of gdp it is not working now. this indicates failure of note bandi.in past manmohan govt compenstated for high oil prices through subisdy provided in budget by mechanism of fiscal defecit.present govt has a policy of market prices but it must understand that it cannot run away from resposibility of providing necessary monetary exchange unit for proper functionong of economy . that is main function of central govt. govt of india must understand that it is fiscal defecit whichtdrives economic growth. it hasto compensate current account defecit with equal amount of fiscal defecit.fiscal defecit should only be reduce when wehave current surpluses like china germany japan or our south asain neighbour.more over we are no longer on gold standard to follow debt gdp ratio of 40% and 3% fiscal defecit norm.
    there are two more problem current govt is spending less and taxing more in order to control fiscal de fecit.state govt fiscal defecit is now almost equal to central govt defecit. while centre is currency issuer states are currency users. while doing macro economic modelling we consider comdined defecit which is wrong. fiscal defecit and centralgovt debt are total liability or money of currenc y issuer. as state defecit is not considered by imf and world bank whilecalculating fiscal defecit of the nation. centre has shifted the burned to state govts. lower spending by central govt has lower growth for states and hence their defecit has gone up.uday scheme has also increase the state govt defecit had central govt taken it on its book it would have provided additional money in the system and provided growth momentum to the economy. India is headed to Greece like situation inspite of having its own currency.

  2. IT is appearing times and again,Cash crunch. It foretells don’t keep your money in BANK.
    It shows the incompetency of people in power who can not access the demand of actual cash in harvest season
    If govt thinks all cash in ATM is black money so denying even Rs 10,000 per week withdrawal with max 5 free withdrawal think who is at the helm of affairs?
    Most savings are routed at source ,online, Amazon Flipkart has taken a huge transactions on line.Rail bus tickets restaurant bills,metro electricity all online.till Govt is unable to provide CASH
    For black money Govt should cease Cash lying at traders contractors or anybody.including Malls,with cash holding more than Rs 2 lakhs..

  3. In this connection , it is necessary to read in between the demand of the President , SBI Officers’ Association that the RBI should declare the amount of currencies being supplied to banks bankwise and understand that the intention of the Govt is to make the Public Sector Banks villain for all the economic ills of our country.

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