Fiscal 2019 on Chaotic Start with Cash Squeeze: One More Blow at Desperate Poll Moves of BJP

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Highly disturbing for the immediate, and potentially damaging for the economy is the sudden outbreak of what is called “cash crunch” in several states, even the State Bank of India being no exception, with all their ATMs going dry. Ordinary customers going to bank counters must be having their own problems of not being able to draw relatively smaller sums they may need. Here’s a report, for Different Truths. 

Fiscal 2019 has not begun well for the terminal year of the majoritarian BJP battling desperately for a renewed mandate in the 2019 Lok Sabha poll – which may perhaps be tactically advanced, depending on mid-May outcome of Karnataka Assembly election.

The mounting opposition has been emerging for the authoritarian dispensation at the Centre on its flawed approaches and governance failures on a wide front, in first four years since 2014-15. The country has witnessed neither economic growth with jobs nor social peace and harmony.

Adding to these, highly disturbing for the immediate, and potentially damaging for the economy is the sudden outbreak of what is called “cash crunch” in several states, even the State Bank of India being no exception, with all their ATMs going dry. Ordinary customers going to bank counters must be having their own problems of not being able to draw relatively smaller sums they may need. If this is not already happening, it is only a matter of days to be put on rationing.

All instantly coming to one’s mind, a re-creation of the misery for millions across the land, akin to what was inflicted by the Prime Minister’s Demonetisation of November 2016, totally unconcerned about consequences. Otherwise, there would have been plenty of preparations for meeting the cash needs of hundreds of millions of customers and businesses.

As it is, the economy is yet to fully recover from the massive disruption wrought on it by illegalising high currency notes equal to 86 percent of currency in circulation and the central bank (RBI) lost its credibility with its unpreparedness to provide amounts of money, even in smaller doses, on any significant scale for over two to three months.

It was not until near the middle of 2017 that the remonetisation was said to have been completed. Economic growth got stunted for two years and a few more millions were added to the unemployed. Demonetisation was launched and completed without achieving any single objective of what was aimed including principally unearthing of black money.

The new wave of the cash squeeze, no matter seemingly it throws up high incompetence at the central bank to manage to maintain sufficient reserves of currencies to keep cash flows when shortages hit the major centres and business areas. One could even assume all this may perhaps be a cover for a deeper game being played out at a concerted level by the Finance Ministry and RBI to bring about an accelerated pace of digitalisation by calibrating cash flows. For Finance Minister Arun Jaitley, the move toward ‘cashless economy’ as fast as possible would be a worthy objective and would please the Prime Minister. Jaitley already wishes India to become a pensioned and insured society.

Otherwise, one has not seen over long decades such a scale of cash shortage and non-operability of ATMs, unless manipulated to reduce cash withdrawals. If the shortage of replaceable currency stocks for ATMs and bank counters is a genuine factor. Then it speaks of total mismanagement at the Central Bank level.RBI is also reported to have decided to cut down printing of new notes in June 2017.

Overall, under the Modi regime, we have witnessed demonetisation, huge shortages of currency, a full-blown crisis in the commercial banking system, hitherto assumed to have been mainly confined to state-owned banks but, what is worse, leading private banks are now getting their own image tarnished.

Far from meeting aspirations of downtrodden millions, as held out in 2014 vote-catching, the Modi Government has been unable to ameliorate the conditions of farmers in deep distress, beyond a promise of doubling farmers’ incomes by 2022. Jobless millions have been left high and dry – again a promise unfulfilled.

The Centre has remained largely a mute witness to the scores of atrocities on Dalits in BJP-ruled states while fatal attacks on Muslims at different centres related to use of beef by Gau-rakshaks had been taking place.  The extreme Hindutva outfits are having a free reign in the country to enforce their own law. BJP may have a retribution to make for all these at the appropriate time.

Gruesome happenings of rapes as in Kathua, Unnao and Surat have not only shocked the nation but have begun to change international perceptions of India. The Prime Minister’s recent London visit had brought out the shifting moods with knots of persons, mostly of Indian origin, staging protests with placards at places on Mr Modi’s entourage.

To this was also added a voice of concern from IMF Chief M. Christine Lagarde in a personal capacity, hoping Indian authorities, “starting with Prime Minister Modi” would pay more attention needed for the women of IndiaModi while in London promised “justice to India’s daughters” though he also took the line that  “rapes” should not be “politicised”.

Though the economy is projected to grow at 7.4 percent in 2018/19, it is all subject to revival of private investment yet to be seen, a likely firming up of RBI policy lending rate in the latter half of 2018 as inflation is said to trend up in coming months with oil and commodity prices rising, Hopefully, normal monsoon is forecast.

S. Sethuraman
©IPA Service 

Photo from the Internet