Several states have reported a severe cash crunch today. People are complaining about ATMs running dry, and they are not able to find enough cash to run their businesses. Although, the government and the RBI have taken immediate action, and set up a committee to rectify the problem. They step up printing currency notes and transfer notes from states that have no such shortage.
Notes and coins in circulation at the end of March stood at 10.9% in 2017-18, which is barely lower than the 11.6% in 2015-16.
In March 2018, digital payments have become more prevalent. Mobile phone apps are widely used to transact safely and conveniently. Use of cash by the public at large would definitely have become reduced. GST has further forced large swaths of the economy to become formal and dispense with the need to use cash exclusively.
The confidence in the banking system has shaken. Some people might have taken fright at the bank’s burden of bad loans and scams. But that should result in a shortage of cash across the country, not in just a few states.
So, it is more likely a political stunt. Most of the states facing cash shortage are poll-bound, this year or next.