 "New currency notes of Rs 500 which is ready to float, at State Bank of India head office in New Delhi")
The Narendra Modi government is struggling not only with the challenge of putting sufficient currency notes into circulation to meet the payday demand during December 1-7, but also of people hoarding the new notes.
According to Finance ministry sources, the government is considering withdrawal of all exemptions on the use of demonetised Rs 500 and Rs 1,000 notes, so that new notes are pushed into circulation.
Sources say there has been a steady improvement in the supply of currency notes and that the Reserve Bank of India (RBI) has planned for the payday rush and banks have made arrangements.
According to sources, RBI’s focus has now shifted to printing the new Rs 500 currency notes to make them available in large numbers. Sources add that of the total Rs 100 currency notes in circulation, RBI had kept 50% of these in reserves to tide over the payday demand. The entire process of printing a high-value currency note, including its security features, takes 21 days before it leaves the mints for circulation.
Senior officials asserted putting money in ample quantities to meet the demand till December 7 would not be a problem.
However, hoarding of new currency notes has arisen as a bigger challenge. To resolve this, some in the government have even suggested that exemptions on old currency notes to be used in petrol pumps, to pay civic taxes and public utility bills should be stopped forthwith. This proposal is under consideration, as it could make people start using new notes.
