Several states in India are facing acute shortage of currency for the previous two weeks. Some of the states which are badly affected are Karnataka, Maharashtra, Rajasthan, Uttar Pradesh, Assam, Telangana, Gujarat and Madhya Pradesh.
People in these states are angry as most of the ATMs have gone dry. Many reasons have been cited for the cash crunch, including hoarding of Rs 2000 notes, ATM recalibration and elections in Karnataka.
A key reason gone unnoticed is the Reserve Bank of India' instruction that disallowed banks from transferring cash from one circle to another. As a result, banks were left with excess cash in some branches while other branches remained deficient in cash.
Another reason is the 54 year low growth in bank deposits witnessed in financial year ending 2017-18. That left a gaping hole in the banking system that neither the government nor the RBI could anticipate.
The cash crunch has also been attributed to a consistent jump in cash transactions in recent months. Despite a rise in digital payments, the currency in circulation may have failed to keep pace with the rising use of cash.
Union Finance Minister Arun Jaitley has called the cash crunch in the country as a 'temporary shortage' and assured that the situation is being tackled quickly.
Arun Jaitley further added that his government will increase the amount of currency mints print on a daily.
According to MoS Finance SP Shukla, the government has cash currency of Rs 1,25,000 crore right now. "There is one problem that some states have less currency and others have more. Govt has formed state-wise committee and RBI also formed committee to transfer currency from one state to other," the Minister said. The government has termed the situation as sudden and temporary which it wants to fix in three days.