Finance minister Arun Jaitley blamed a ‘sudden and unusual’ increase in the demand for cash for causing a scarcity in currency notes in some states.
Commenting on the reports that banks are running short of cash in many states such as Andhra Pradesh, Uttar Pradesh, Bihar and Madhya Pradesh, Jaitley said he has reviewed the currency situation.
“Over all, there is more than adequate currency in circulation and also available with the Banks,” Jaitley said.
“The temporary shortage caused by ‘sudden and unusual increase’ in some areas is being tackled quickly,” he added.
The scarcity of currency notes has puzzled both the government and banking officials.
Though some people are linking the phenomenon to the demonetization move that was conducted two years ago, banking officials dismissed the suggestion.
They point out that a total of Rs 18.3 lakh cr worth of currency notes are in circulation in India at present, which is more than the Rs 17.8 lakh cr worth of notes that was there just before demonetization.
Some, meanwhile, are trying to link the curious phenomenon to the procurement of agricultural crop in certain states like Madhya Pradesh, while others see a link between the scarcity and the festival of Akshaya Tritiya that will be held tomorrow.
During Akshaya Tritiya, it is customary for Indians to buy gold as a good omen, and most of the gold purchases in India are done via cash.
There are also others who link the scarcity to upcoming elections in states like Karnataka, Andhra Pradesh, Madhya Pradesh etc..
Elections in India involve a lot of expenditure, most of which is carried out using untaxed or illicit income, and can therefore only be done via cash.
The government, meanwhile, has been trying to encourage people to adopt cashless payment methods like debit cards, UPI and Aadhaar-Enabled Payments, but has had limited success so far.
It is now considering giving a discount on the final price to anyone who pays using electronic means.