Demonetisation’s ghost is back to haunt Govt, RBI: Chidambaram on cash crunch

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New Delhi [India]: Former finance minister P. Chidambaram on Wednesday attacked the Centre and the Reserve Bank of India (RBI) over the cash crunch in the country, saying that the “ghost” of demonetisation was back to haunt them.

The RBI on Tuesday clarified that no currency shortage took place. However, citizens have continued to face the issue.

Chidambaram took to Twitter and in a series of tweets, he said, “The ghost of demonetisation has come back to haunt the Govt/RBI. Why are ATM’s still bring re-calibrated even 17 months after demonetisation? RBI’s statement is unsatisfactory. If RBI has printed and supplied sufficient cash, it must explain why there is a cash shortage.” (sic)

Chidambaram also lashed out at the government on the recent bank scams, asserting that people appeared to have lost confidence in the banks.

“I suspect ordinary people are withdrawing cash but not putting back into the banks their surplus cash. It is possible that there is some loss of confidence in the banking system, thanks to the bank scams,” (sic) Chidambaram said in the other tweet.

“Cash is back with a vengeance” says Navrose Dastur, MD, NCR Corp, India. I support digitisation, but Govt cannot force the pace of digitisation or arbitrarily reduce the supply of cash. After demonetising 500 and 1000 rupee notes, Govt printed Rs 2000 notes! Now, Govt is complaining that Rs 2000 notes are being hoarded!! We always knew that Rs 2000 notes were printed only to help hoarders,” Chidambaram further noted in the other tweets. (sic)

Further lashing out at the Centre, Chidambaram said he suspected that the RBI seriously miscalculated demand for cash in the post-harvest season.

“I also suspect that RBI seriously miscalculated demand for cash in the post-harvest season. Is it correct that currency in circulation has increased by only 2.75 per cent since demonetisation? If so, I maintain that Govt or RBI are not allowing money supply to grow at the same rate as the nominal GDP,” (sic)

According to media reports, an unusual spurt in demand for currency had led to many ATMs and banks running out of cash in Uttar Pradesh, Madhya Pradesh, Andhra Pradesh, Telangana, poll-bound Karnataka and some other states on Tuesday even as the government and the RBI assured the public that there was no currency shortage. (ANI)