The Process To Replace 86% Of Currency Will Be Long-Drawn: Jaitley

Regret inconvenience caused, currency exchange a long process, urge people to opt for digital payments, accept available currency: FM

Millions of panicked people lined up outside banks and ATMs across India on Friday to exchange scrapped banknotes. (Photo: Reuters)
Millions of panicked people lined up outside banks and ATMs across India on Friday to exchange scrapped banknotes. (Photo: Reuters)

Finance Minister Arun Jaitley tried to calm nerves of a bewildered population facing an unprecedented cash crunch caused by the government’s demonetisation drive. In a media interaction on Saturday afternoon he offered assurance that there is “enough money” in currency chests.

The government is regularly monitoring the currency exchange process. It was aware that exchange of 86 percent currency of Rs 14 lakh crore will face challenges. This is a massive operation and has just begun. We have enough money in our currency chests.
Arun Jaitley, Finance Minister

Stay Calm And Line Up

The Finance Minister expressed regret at the inconvenience caused to citizens but added that an extended notice period to the country would have given “the whole game away”. Which was also why bank ATMs could not have been recaliberated earlier.

Offering data to illustrate the magnitude of the exercise, Jaitley said

  • Banks have 100 times more rush
  • In the last 60 hours the country’s largest bank, State Bank of India (SBI) has executed cash replacement transactions worth Rs 2.28 crore.
  • SBI has received cash deposits worth Rs 47,868 crore so far

Jaitley admitted that the supply of new currency would take time and that it “cannot reach banks overnight”.

The RBI and government are ready. Process is slower and much bigger than normal transactions. It’s a long-drawn process.
Arun Jaitley, Finance Minister

Jaitley appealed to citizens to avoid rushing to banks as the deposit scheme is available till December.

He urged that “jeevan saral rahega” (life will be simpler) if citizens shift to digital and cashless mode of payment like debit cards, online transactions, cheque deposits and withdrawals.

Business Are Facing A “Temporary Disruption”

When asked about the impact on businesses as cash withdrawals were limited, the finance minister agreed that there will be some disruption cost to economy in the short-term, but he assured that the long-term advantages are much more.

“Capacity of banks to lend businesses will be much higher today. It is a temporary disruption,” he said.

He said he had received representations from several sectors to grant them exemptions from the demonetisation provisions, but that was not feasible as “every exception will be a gateway for black money to emerge again”.

“Irresponsible Opposition”

Jaitley said that some of the political remarks made in past two days are “irresponsible.”

Congress members say: it’s their money why should they stand in a line? But the country doesn’t know if all taxes have been paid. There is no weight in allegations of spike in RBI deposits, which led to currency replacement decision. Marginal hike in bank deposits was only for September 2016, reason being the release of Pay Commission’s salary arrears.
Arun Jaitley, Finance Minister

Jaitley refuted allegations that BJP leaders had advance information regarding the demonetisation decision. “These are wrong rumours. There are long queues and government is aware of the inconvenience caused. We had factored how first few days will be inconvenient but its good for the economy in the long run,” he reiterated.

He also rubbished rumours regarding declining salt stock in the country and hike in their prices.

Spike In Deposits In Jan Dhan Accounts?

The government said it is looking into a reported spike in deposits in Jan Dhan accounts. Anjuly Chib Duggal, financial services secretary, told reporters on the sidelines pf the media conference, that data has been sought from the Indian Banks Association (IBA) on the same. “We will look at the data and we are monitoring the issue closely,” she said.

Meanwhile, several economists have expressed their support for and against this demonetisation move. Among them, World Bank Chief Economist and India’s former Chief Economic Advisor Kaushik Basu tweeted on Friday evening suggesting that demonetisation does more damage over benefits.