Responding to the burning issue of cash crunch in Andhra Pradesh, Telangana, poll-bound Karnataka, Madhya Pradesh and Uttar Pradesh where ATMs in several parts are running out of cash, former finance minister P Chidambaram said the “ghost” of demonetisation has come back to haunt the government and alleged that the Rs 2,000 notes were printed only to help hoarders.
In a scathing attack against Modi-led NDA which had implemented “Demonetisation”, Chidambaram also said there was a possibility that people have lost confidence in the banking system due to the “bank scams” and they were not putting their surplus money into the banks.
“The ghost of demonetisation has come back to haunt the Govt/RBI. Why are ATMs still being re-calibrated even 17 months after demonetisation? 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 shot back.
Dismissing the statement of the Reserve Bank of India that there was no shortage of currency in the system as “unsatisfactory”, the senior Congress leader said if the RBI has printed and supplied sufficient cash, it must explain why there is a cash shortage.
“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/RBI are not allowing money supply to grow at the same rate as the nominal GDP,” he said.
Chidambaram said he suspected ordinary people were 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,” he said. He said he supported the digitisation, but the government cannot force the pace of digitisation or arbitrarily reduce the supply of cash.
Unusual spurt in demand for currency had led to many ATMs and banks running out of cash in AP, Telengana, Karnataka, MP and UP and some other states. While the government and the RBI assured the public that there was no currency shortage, the situation on ground is totally different.
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