New Delhi, December 27: Three days to go and Modi Government’s deadline for submitting old notes in the bank expires. The big question remains– What will happen after November 30?
Will cash crunch ease a bit? The entire nation wants to know, after Dec 30, will the drawn out ATM queues shrink? Will the cash withdrawal limits be removed by the government?
Prime Minister Narendra Modi had said that all problems will wade off after December 30. The finance Ministry also chipped in to support the PM’s promise and said that the cash crunch would cease to exist after December end or January Middle.
However, as per the Business standard, the cash crunch would not wriggle out your lives till the government brings back a sufficient amount of cash back in the economy. The restrictions on withdrawal limits from banks and ATMs are likely to stay for longer.
As per the statement released by Finance Minister Arun Jaitley a couple of weeks back, Even if the situation eases by mid-January, the Ministry and the Reserve Bank of India will take their time in assessing the situation before lifting the caps. Senior government sources also confirmed the news.
The opposition parties have raked up the burning question in the united opposition party meet today and challenged PM Modi if he would chose to resign if the situation fails to improve after Decemebr 30?
The latest data available on RBI’s website suggests that banks have issued notes worth nearly Rs 6,00,000 crore till December 20 through ATMs and over-the-counter after the noteban announced on November 8. This is just 39 per cent of the Rs 15.4 lakh crore in old 500- and 1,000-rupee notes that were scrapped by demonetisation on November 8.
Earlier Economic Affairs Secretary Shaktikanta Das also said that the Centre expects only 50 per cent of the demonetised amount to be remonetised by end-December.
So, 39 % is far below the Finance Ministry and RBI’s comfort level to remove withdrawal restrictions.
A senior government official told BS: We do have a plan in mind on when to remove withdrawal restrictions. Any such decision will be deliberated upon and will be taken when the government and the central bank see that there is a fair amount of money disbursed back to the public.
However a top Finance Ministry official said that the ‘comfort level’ would come around 80 per cent, that is more than Rs 12 lakh crore remonetised notes in the economy.
Going by these remarks, it is clear that withdrawal limits would be removed gradually and the situation may not improve before end-January or early-February.
Chief economist at State Bank of India Soumya Kanti Ghosh also said earlier this month that re-monetisation of 75 per cent of currency may occur by end-January at the current rate of non-stop printing by the four mints.
As per all the estimates by former government and RBI officials the monthly capacity of the four printing presses currently printing new notes of Rs 500 and Rs 2000 is at 3 billion notes per month.
At that rate, former finance minister P Chidambaram has surmised, “it would take more than seven months to replace the nearly 23 billion notes demonetized. Of course that timeline will reduce if all notes are only of Rs 2,000, but that would create another cash crisis as change for such notes is not easily available.”
All hopes are relying heavily on minting machines working overtime, we hope the machines do not run out to extend the waiting time!