Former finance minister and Congress leader P Chidambaram on Wednesday said the “ghost of demonetisation” has come back to haunt the government, adding that the Reserve Bank of India (RBI) has “seriously miscalculated” demand for cash in the post-harvest season. Terming the RBI’s statement of having sufficient cash as “unsatisfactory”, Chidambaram said if the RBI has printed and supplied sufficient cash, it must explain why there is a cash shortage.
He also said that the government is complaining that Rs 2,000 notes are being hoarded, but they were printed only to help hoarders. “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,” he said in a series of tweets.
Chidambaram said that there is a possibility that ordinary people are withdrawing cash but not putting back their surplus cash into the banks. “It is possible that there is some loss of confidence in the banking system, thanks to the bank scams,” he said in one of the tweets. He also questioned the recalibration of ATMs even after 17 months of demonetisation.
The former finance minister pointed towards the slow rate of increase of currency in circulation. “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. He said he supported digitisation, but the government cannot force the pace of digitisation or arbitrarily reduce the supply of cash.
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