Cash crunch in parts of India?

There are reports coming from different corners about cash crunch and empty ATMs.

Madhya Pradesh chief minister Shivraj Singh Chouhan on Monday alleged a conspiracy aimed at creating cash crunch in the market by hoarding Rs 2000 currency notes and warned that the government will act sternly against the perpetrators.

“When demonitisation took place, markets were flooded with currency notes worth Rs 15 lakh crore. Today, Rs 16.5 lakh crore currency notes have been printed and circulated. But where are the Rs 2000 currency notes vanishing? Who is hoarding them? Who is creating currency crunch?” Chouhan asked a large gathering of farmers at Shajapur district headquarters. 

 

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One Response to “Cash crunch in parts of India?”

  1. ashoksinghania Says:

    as current account defecit asrisen there is shortage of monetary exchange unit. as imports are nothing but leakage from the system. in past there was enough cash in circulation shortage was never felt. cash as percentage of gdp was 30% during vajapee era it has now fallen to 10% of gdp during modi period. it also indicates massive failure of rbi and finance ministry. basic function of central govt is to provide adequate monetary exchange unit both cash as well as bank money.shotrage of money was compenstaded by extra rotation of cash but as it has fallen below 10% of gdp it is not working now. this indicates failure of note bandi.in past manmohan govt compenstated for high oil prices through subisdy provided in budget by mechanism of fiscal defecit.present govt has a policy of market prices but it must understand that it cannot run away from resposibility of providing necessary monetary exchange unit for proper functionong of economy . that is main function of central govt. govt of india must understand that it is fiscal defecit whichtdrives economic growth. it has to compensate current account defecit with equal amount of fiscal defecit.fiscal defecit should only be reduce when we have current surpluses like china germany japan or our south asain neighbour.more over we are no longer on gold standard to follow debt gdp ratio of 40% and 3% fiscal defecit norm.morever
    are two more pr oblem current govt is spending less and taxing more in order to control fiscal de fecit.state govt fiscal defecit is now almost equal to central govt defecit. while centre is currency issuer states are currency users. while doing macro economic modelling we consider comdined defecit which is wrong. fiscal defecit and centralgovt debt are total liability or money of currenc y issuer. as state defecit is not considered by imf and world bank whilecalculating fiscal defecit of the nation. centre has shifted the burned to state govts. lower spending by central govt has lower growth for states and hence their defecit has gone up.uday scheme has also increase the state govt defecit had central govt taken it on its book it would have provided additional money in the system and provided growth momentum to the economy.. india is headed for greece like situation inspite of having its own currency.

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