Friday , 18 January 2019
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Cash Crunch, A Symptom Of A Malaise

PACHU MENON, MARGAO

APPARENTLY we are in for another economic pandemonium with reports of severe cash crunch affecting a number of states in the country. Over the past few days, news reports on cash crunch at  ATMs have revived fears of the pain Indians suffered after the demonetisation.  While a statement issued by the Union ministry of finance assuring adequate supply of banknotes to alleviate public apprehensions over the spectre of a similar situation akin to the one brought about by the government’s financial shock of November 16, 2016, the fact remains that the roots of the abrupt cash squeeze lie in Prime Minister Narendra Modi’s decision to overnight void 86 per cent of currency in circulation from where cash levels have never quite fully recovered. Suggestions that growth in currency is not keeping pace with the typical pickup in demand leading to the obvious shortage cannot be dismissed either. However, the lack of clarity on our economy prevents an appropriate explanation to the sudden ‘spell’ of ATMs running dry! It is now averred that the country may need an additional Rs 70,000 crore to Rs 1 lakh crore  to meet the cash demand of a growing economy. The ATM fiasco has however laid bare the nation’s emphatic reluctance to switch over to a cashless economy. But it is the panic-like situation building up over the cash crunch across the country that warrants the immediate attention of the authorities. Quite often it is the misinformation than anything factual about the problem in hand that sets the public on a panic mode. Although states like Goa don’t seem to be adversely affected by the shortage of banknotes   experienced at the ATMs in other parts of the country as yet, the hyper-active social media will ensure that the temporariness of the problem is  mishandled in such a manner so as to bring about a catastrophic situation. Unnecessary withdrawals by people will only hasten depletion of currency reserves at various teller machines adding to the chaos. But it would be wrong to entirely blame the public for the current woes. Ever since the “Crash of ‘16”, Indians have been quite wary of Modi Sarkar’s financial experimentations that have only tended to add to the misery of the common man.

 

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