A big reason for the current unease in the cash economy is the shortage of lower denomination notes. The RBI flooded the system with Rs 2,000 notes soon after the demonetisation announcement, but this didn’t help much since it was difficult to transact in these denominations. The supply of Rs 500 notes have improved since then, but not to the desired extent. Things have relatively improved in metros and semi-urban centres but rural areas continue to feel the pinch.
According to Chaudhuri, there is a ‘general sense’ that private sector banks have been given more cash and since these banks have limited presence in the rural areas, enough cash isn’t reaching these centres. One doesn’t have information on the latest data on the new currency printed and, of which, how many are Rs 500 pieces since RBI has been hesitant to share the details. A Firstpost RTI query seeking these details has remained unanswered yet.
The bottom line is this: The central bank’s move to double the daily cash withdrawal limit is indeed a welcome step and a small relief, but to arrest the panic-driven cash hoarding it needs to lay out a plan in public and come with a firm guidance.
Watch here,
(Sourced from agencies, feature image courtesy:ibtimes.co.in)
