Both the Government and the central bank continue to be at their arrogant best by saying cash troubles are all but over. It is the Marie Antoinette moment all over again.
Dejure they may have done away with most restrictions but defacto most restrictions remain. Yesterday there was news that ATMs are again running dry which needs to be investigated for its veracity.
In all this the basic idea of velocity of money has but been forgotten. Demonetisation was not just about taking currency away but hitting the velocity of currency circulation severely. Likewise, remonetisation is not just about replenishment of stock of cash but improve the flow of currency as well. The Rs 2000 note which has partly replenished the stock has failed miserably to resurrect the flow as it was expected.
So we will keep hearing such stories for a while especially from hinterlands. In these places, even stock has not been replenished:
On Sunday, days before the third month after demonetisation drew to a close, a group of men and women gathered under a mahua tree in Khadkipada to discuss what had changed for them since the demonetisation announcement.
The village, home to the indigenous Warli community, is located at the foot of a hilly outcrop around 20 km from Dahanu town on Maharashtra’s western coast. The land here is dry, allowing for cultivation only once during the monsoon. The men tend to their fields during the rains and travel for work for the rest of the year, be it to the Gujarat Industrial Development Corporation as Nimbhal used to, to the brick kilns spread out across Palghar, to fisheries along the coast, or cutting and selling dried grass for press machines.
Nimbhal is not the only one who has had to make do with a limited flow of cash since demonetisation. Cash supply at banks in the area continues to be stilted a month after the deadline to deposit old notes ended. Even when employers pay workers by cheque, there are delays in withdrawing that money, which results in loss of working days. Add to these problems the fact that many in the village, like Nimbhal, do not have bank accounts.
Sunita Narle, a resident, had a few of the old notes she had saved over the years. The news of demonetisation took a little more than a week to reach the village through the men who work outside. When she realised a part of her savings were no longer legal tender, she was at a loss for how to exchange it.
“Since I don’t have a bank account, I gave it to others to deposit,” Narle said. “I have not got the money back yet because there is no money in the banks and my friends have not been able to withdraw it.”
Sakharam Umbersada, another resident of the village who had gathered at the meeting, spoke of problems villagers still faced at the nearby bank branch. “It takes people two or three weeks just to get their money out of the bank,” Umbersada said. “We go to the banks and stand in line, but our number is not called. When big people come, they get money immediately, but not us.”
Instead of shunning all claims that demonetisation woes are all but over, the Government should be more sensitive to what is going around. It should encourage rigorous reporting of facts from all possible areas and share with citizens. But we have a case where even the central bank refuses to give any details after nearly 40 days of the exercise being over.
It is this arrogance and hubris which eventually is behind all falls from perceived heights…