CASH Crunch throughout INDIA. What exactly is the reason for it?

India seems to be reeling under the effects of demonetization once again as there seems to be acute cash crunch throughout India especially which started from the Southern states and which is now slowly spreading to the other states.

There seems to an acute shortage of currency but is this shortage due to only one reason and due to a single reason only?

There seems be more than one reason for the acute cash crunch and there seems to be reeling from the after effects of it.

So, what has led to the supply squeeze or cash crunch?

The RBI reduced the ordering of the printing of the new notes for the financial year 2018.

The printing presses have cancelled the purchases of new fresh ink and the different raw materials which are required for the printing.

The press has also stopped printing the high-denomination notes.

Obtaining the raw materials will still take some time and it won’t happen anytime soon. The RBI estimated the current shortage at nearly 5 billion.

And as compared to the demonetization trends, the currency in circulation should have been around 23 trillion by now as compared to only 8 trillion as far as the previous trends were compared.

Another reason is that the RBI had also reduced the currency printing of the notes in last June which also led to the decrease in the currency of the notes.

Also, according to the research, the demand for the currency notes has doubled in the last few days and is also responsible for the cash crunch. It has been demanded to around 4000-5000 crore and the demand has been to around close to 45,000 crores.

However there has been no clarification still from the RBI and they are all ramping up the production at the different houses.

Which are the various states in India which have remained typically affected?

Andra Pradesh

Madhya Pradesh

Telangana

Bihar

Maharashtra

These are all the major states which are going through a cash crunch.

 

 

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