Indigenously designed new banknotes are less susceptible to counterfeiting than the old Rs 500 and Rs 1000 currencies, economic affairs secretary Shaktikanta Das said on Thursday, stressing that the cash crunch situation across the country will improve over the next two-three weeks.
He said the government’s initial focus after the November 8 decision to recall the high-value notes was to print Rs 2000 bills in order to replace more amount of old currencies in shorter time.
“The focus is now on printing Rs 500 notes. Earlier too, Rs 500 notes were being printed parallelly,” Das said, as reports from across the country said people were facing difficulties in using Rs 2000 notes.
“More and more production lines have been diverted for Rs 500 notes as enough stock of Rs 2,000 notes is now there. Printing of Rs 500 notes significantly stepped up so that Rs 2,000 notes become more mobile,” he said.
Das said the process of distribution has also been further streamlined with printing presses being linked to distribution areas nearer to them.
He said the government’s emphasis was also on making cash available to cooperative banks for crop loan disbursement.
The government is in touch with the RBI and National Bank For Agriculture and Rural Development (NABARD) to ensure district cooperative banks have enough cash, he added.
“We are identifying rural areas from where we are getting reports of inadequate cash. Emphasis is also on greater cash to rural areas.”
In the wake of income-tax raids across the country, Das said the action against illegal accumulation of new notes was based on specific inputs by revenue authorities and by the Financial Intelligence Unit.
“Notes seized from illegal accumulations are being put back into the circulation as soon as possible.”
He assured that the various wings of the government, the RBI and banks were working to improve the cash situation.
Prime Minister Narendra Modi’s surprise announcement to scrap the old notes has led to chaos and confusion across the country, with millions of consumers queued outside banks and ATMs to change a limited number of old notes for new ones or withdraw cash. The government said the move was aimed at rooting out black money and corruption.
“The total number of notes in lower denominations of Rs 100 and below supplied in the last five weeks is three times of what RBI supplies in a year,” Das said.
He said of the 2 lakh 20 thousand ATMs across the country, more than two lakh have already been re-calibrated to dispense the new notes.
No printing target
“The remonetisation will be as per requirement. There is no target that we have to reach (print) Rs 15 lakh crore,” Das told reporters.
“The government has given significant push to digitisation and digital payments. So the requirement of the cash will be measured and according to that it will be pushed into circulation,” he added.
Das said that by December-end, government would have put about 50% of Rs 15.44 lakh crore in circulation.
On Fed rate hike
He said India is “very well cushioned” to absorb the impact of the US Federal rate hike and the currency market will stabilise after witnessing the initial ripples
India will have to “balance out” its interest rate with that prevailing in the US to control the flight of capital so that there is no volatility in the rupee-dollar exchange rate, Das said.
(With agency inputs)