Letter to BS: Anecdotal evidence of lower availability of notes

The debate on the lower availability of currency notes has turned sharper and the Centre has defended itself saying that there is no shortage of currency in the economy and all possible measures are being taken to ensure the proper running and replenishing of ATMs. The Centre appears to be correct to a great extent albeit in a traditional way. What has changed in the currency notes composition from the time demonetisation was announced is the introduction of the Rs 2,000 note. One possible consequence is that the average cash balance in the wallet has gone up as one who is used to keeping a Rs 1,000 note is now shifting to holding a Rs 2,000 note. 

Think of the consequences if only about 100 million heads of the households out of over 350 million total households, have made this innocuous transition to Rs 2,000 note. This example, even if partially true, will indicate that the cash requirement of the households and the economy also need an ideal mix in the denominations of the currency available, which has been apparently disturbed over the past one year. A compulsory heavier purse and bigger emergency money kept at home can turn partially ineffective the efforts of the authorities to normalise currency shortage. There appears to be a need to study the above behaviour that is supported by anecdotal evidence.

Y P Issar Karnal

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