The Cash Crunch In India Is Not Because Of Demonetization

The demonetization launching Rs. 2000 notes in India replacing other currencies has hit the economy once again. All of a sudden, the economy has faced severe money emergency and money crunch.

Despite the statement from the Finance Minister that there is enough currency circulated in the system, cities in India have faced a shortage of cash in the ATMs.

Upwards of six states– Gujarat, eastern Maharashtra, Madhya Pradesh, Bihar, Andhra Pradesh and Telangana– have whined of money lack with ATMs throughout the country going dry. There have been reports of non-accessibility of trade out of Delhi too– a harsh indication of the post-demonetisation stage.


With a few states revealing money lack, Union Finance Minister Arun Jaitley on Tuesday ventured in to ease fears demanding that “there is more than sufficient cash available for use”.

Having investigated the cash circumstance in the nation, Jaitley claims that overall there is more than satisfactory money available for use and furthermore accessible to the Banks. The brief deficiency caused by ‘sudden and irregular increment’ in a few zones is being handled rapidly, he adds.

The phantom of DeMo is back! The nation has all of a sudden slipped into an intense money emergency, with numerous states seeing phenomenal money crunch. Truth is told the vacant ATM and teller counters have found the RBI and the administration totally undisturbed.


As rage spread crosswise over states, including the survey bound province of Karnataka, Arun Jaitley issued an announcement, saying that the administration will do all that is expected to facilitate the circumstance, even as the RBI moved quickly to print more money notes

Addressing Economic Times, Sanjiv Sanyal, the foremost guide to the fund distribution, said the administration will likewise take action against conceivable storing of Rs 2,000 notes.

So what has prompted the sudden money crunch? Brokers demand the circumstance isn’t practically attributable to the DeMo days, however, specialists say the celebration season could be one reason.


The BJP has hit back, blaming the resistance for spreading bits of gossip for political additions. One thing is without a doubt: any DeMo-like circumstance could do hopeless harm to Team Modi in the run-up to the surveys and the 2019 general elections.

Yashwant Sinha, senior BJP leader, mentions the prime reason for the recent cash crunch to be poor administration, distribution and management of the currency.

In an interview with CNBC-TV18, Sinha mentions that there have been no backup plans to compensate or address such emergencies as of present situation and the everyday widespread news and concerns show the high intensity of the issue. The magnitude of the crunch is huge requiring immediate attention.


Sinha said, “Taking into account the total currency in circulation, this is complete mismanagement on part of the Reserve Bank of India (RBI).”

The other hypothesis that is doing the rounds is accumulating of money by political gathering pioneers ahead of the state surveys. Whatever the reason might be, the intense money crunch has set off a political slugfest.

Telecom Minister Manoj Sinha advocates that there is adequate cash available in the economy while the hype of currency shortage is created to mislead the nation. He does not support for demonetization to be the reason behind the current chaos.


“I feel that it is unnecessary hype which has been created. Finance Secretary and RBI have said that there is no cash crunch in 80 percent of the ATMs and there is enough cash available in RBI chest also. It is a political conspiracy to mislead the nation. People should remain cautious from such conspiracies,” Sinha said in reply to an inquiry on cash crunch in the nation.

He assumed that an artificial demand was formed to generate the hype around cash crunch.

There have been numerous causes explained including political distress, demonetization, festival and harvesting season along with money mismanagement. Regardless of the reasons, it is the people who are suffering the crunch causing death because of lack of funds.


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