The latest calculation, based on capacities of the currency printing presses, shows that replenishment would take around six months.
This is particularly true for the new Rs 500 notes, whose printing, presumably, started after November 10. Till those are replenished in adequate numbers, the “currency pain” would not go away since Rs 2,000 notes are difficult to exchange for lower denominations.
However, enough of the new Rs 2,000 notes may already have been printed, calculations show.
The central government had demonetised Rs 500 and Rs 1,000 currency notes on November 8, sending the whole nation into a tizzy. Long queues outside banks have been a daily occurrence since then because enough currency notes are not available to them.
New information gleaned from public sources show that the government may be too optimistic in claiming that “adequate amount” of money would soon be in circulation.
That’s because of the limited capacity of the printing presses in the country for such a sudden, huge job.
There are four currency presses — one each in Nashik (Maharashtra), Dewas (Madhya Pradesh), Salboni (West Bengal) and Mysuru (Karnataka).
The first two are owned by the central government through the Security Printing and Minting Corporation of India Ltd. According to information available in the Finance Ministry’s latest annual report, the yearly currency printing capacity of these two presses is around 40 per cent of the total in the country.
The other two presses — in Salboni and Mysuru — are part of the Bharatiya Reserve Bank Note Mudran Pvt. Ltd. (BRBNMPL), a wholly-owned subsidiary of the Reserve Bank of India (RBI). These two, comprising 60 per cent of the total capacity, can print 16 billion notes in two shifts per year, according to information available on BRBNMPL’s website.
In essence, it means that total capacity in the country would be 26.66 billion notes in two shifts. If all three shifts run, as the government says is happening now, the four presses would be able to print 40 billion notes a year, irrespective of the denomination.
Now, according to the government, the total money in circulation — before Rs 500 and Rs 1,000 notes were declared illegal — was Rs 17.54 lakh crore or Rs 17,540 billion. Of this, 45 per cent was in Rs 500 denomination — equivalent to Rs 7.89 lakh crore or Rs 7,890 billion and 39 per cent in Rs 1,000 notes amounting to Rs 6.84 lakh crore or Rs 6,840 billion.
In other words, there were 15.78 billion notes of Rs 500 denomination in circulation and 6.84 billion notes of Rs 1,000.
But if they are going to print Rs 2,000 notes equivalent to the value of the Rs 1,000 notes declared illegal, that is, worth Rs 6.84 lakh crore, they would have to print only half or 3.42 billion notes.
If the printing started in early September, as has been claimed by some printing press officials, they would need only a little over two months to meet the full requirement, even at 50 per cent capacity. In other words, they should have printed all the replacement needs of Rs 2,000 notes till now.
Further, how long will they need to print Rs 500 notes, now that the machines would not be printing Rs 2,000 notes? Assuming an 80 per cent run (remember Rs 500 and Rs 1,000 comprised 84 per cent of all currencies), the time taken for the new Rs 500 notes, which began printing, presumably, on November 10, would be 5.9 months.
The rest of the 20 per cent capacity could be used for the lower denomination notes from Rs 5 to Rs 100.
So, by April-end, one would presume, all the new notes would be in circulation. And, of course, the pain would be longer than the 50 days that Prime Minister Narendra Modi has mentioned.
The government on Thursday announced a set of seven decisions pertaining to demonetisation, mainly aimed at smooth sowing season ahead, including permission to farmers to withdraw up to Rs 25,000 per week and registered agri-traders Rs 50,000 per week from their bank accounts.
This apart, for families that have an upcoming wedding, one member of the household can withdraw up to Rs 250,000 one-time, subject to furnishing an undertaking that no other individual will be availing such a concession for the purpose and also upon giving the PAN card details.
However, the amount of money that an individual can exchange from banks by handing over the old Rs 500 and Rs 1,000 notes has been lowered to Rs 2,000 from Rs 4,500 with effect from Friday. The use of indelible ink for such withdrawals will continue.
Giving these details, Economic Affairs Secretary Shaktikanta Das told reporters here that since the country is at the commencement of Rabi sowing season, the government wants to ensure farmers get a smooth supply of inputs such as seeds and fertilisers.
“Crop loans are sanctioned by various banks to farmers. The government has allowed Rs 25,000 per week for farmers to draw in cash, subject to the limit of which crops they are sowing. This cash can also be taken from their Kisan credit card,” Das said.
Another concession is for farmers who sell their produce through the various Agricultural Produce Marketing Committees.
“Farmers who sell their produce in mandis, against the payments they receive by way of cheque or RTGS method (electronic transfers into their bank accounts), they can draw up to Rs 25,000 per week from their own account,” Das said.
Similarly, agri-traders registered with such marketing committees can withdraw up to Rs 50,000 per week from their designated bank accounts.
The secretary said both Prime Minister Narendra Modi and Finance Minister Arun Jaitley decided to favourably consider the representations made by families that have upcoming weddings — hence the Rs 250,000 withdrawal allowance.
Two other decisions taken on Thursday are: A 15-day extension in the payment of crop insurance by farmers and an allowance for withdrawing Rs 10,000 as an advance for central government employees up to Group ‘C’ to be adjusted against their November salary.
This will also apply to employees of Indian Railways, defence and state-run units.
Meanwhile, Union Finance Minister Arun Jaitley said there was no dearth of cash due to demonetisation, and that banks were being supplied adequate currency by the Reserve Bank of India (RBI). He expressed regret at the political opposition over the move but ruled out a rollback.
“The Reserve Bank is providing adequate notes to currency chests. There are around 4,400 of them. There is absolutely no shortage,” Jaitley told reporters here while asking people not to believe gossip mongers who are spreading misinformation.
“Unnecessary panic is being spread. But I didn’t expect Chief Ministers of some states joining this,” Jaitley said, in an obvious reference to West Bengal’s Mamata Banerjee and Delhi’s Arvind Kejriwal, who have threatened an agitation if demonetisation is not rolled back.
“There is no question of a rollback,” Jaitley said emphatically.
“I have myself seen in bank branches. Deposits are taking place, withdrawals are taking place. In the next few days, we’d have completed the world’s largest exercise in currency replacement,” he said, complimenting bank employees on their commendable job.
Earlier in the day, Jailery ruled out any plan to re-monetise Rs 1,000 notes and defended the decision to reduce the exchange limit for demonetised notes to Rs 2,000.
“The government’s decision to limit the exchange of banned Rs 500 and Rs 1,000 notes to Rs 2,000, from the existing cap of Rs 4,500, would stop misuse of funds,” Jaitley told reporters here.
“As of now, there is no plan to reintroduce Rs 1,000 note,” he said.
The Finance Minister also said 22,500 automated teller machines (ATMs) would have been re-calibrated by end-Thursday.
“Some 22,500 ATMs will be recalibrated today to allow withdrawal of Rs 100, Rs 500 and the Rs 2,000 notes. Nearly 200,000 ATMs exist as of now,” he added.
In this connection, the Reserve Bank of India on Thursday reiterated there is sufficient supply of notes and asked citizens not to hoard currency.
“The Reserve Bank of India has once again clarified today that there is sufficient supply of notes consequent upon increased production which started nearly two months ago. Members of public are requested not to panic or hoard currency notes,” the RBI said in a statement posted on its website. (IANS)
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