Government to up printing of Rs 500 notes to tackle cash crunch: DEA Secretary
New Delhi, April 17: To meet the "unusual" currency demand in the country, the government has decided to increase printing of Rs 500 notes by five times, Economic Affairs Secretary Subhash Chandra Garg said here on Tuesday.
"We have taken steps to increase the supply of currency in case the demand were to go up further. To give you an example, Rs 500 notes -- we print about 500 crore of notes per day. We have taken steps to raise this production five times," Garg said at a press meet called to calm fears after reports of currency shortages emerged from several parts of the country.
"Very soon, in the next couple of days, we will have a supply of about Rs 2,500 crore worth of Rs 500 notes per day. In a month, supply would be about Rs 70,000-75,000 crore. These notes alone can more than meet the demand of any month," he said.
Garg asserted that there was no cash crunch in the country, pointing out that currently around Rs 18 lakh crore worth of currency was in circulation -- a little over what was in circulation at the time of demonetisation.
"We keep Rs 2.5-3 lakh crore more currency in stock for excess demand. In the last few days, we have pumped cash into the system to meet the demand. We still have a reserve of Rs 1.75 lakh crore."
He said there was "unusually high demand" for currency in the last couple of months. As opposed to an average demand of about Rs 20,000 crore a month, "in the first 13 days of April itself there was a demand of Rs 45,000 crore", he said.
Garg attributed this sudden cash demand to localised phenomenon.
"This unusual spurt in demand is seen more in some parts of the country like Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh and Bihar," the Finance Ministry said in a statement on Tuesday.
"We have noted that this is coming more from some parts of the country. There might also be some sort of a feeling in some people that if the cash runs out, why not keep it in reserve so it may be safe... a kind of 'shortage mentality'. But believe us, there is no shortage, there is no cash crunch," he said.
"There is no shortage of notes in stock, there is no shortage of cash being printed... Therefore I would urge... every citizen not to hoard or stock cash -- it is not required. You are unnecessarily raising your risks. We have adequate cash, but the preferable mode of use is digitisation, so use it," Garg added.
Asked whether there was any hoarding of the Rs 2,000 notes, he said: "In this system, there are about 6.70 lakh crore worth of Rs 2,000 notes. They are more than adequate to meet the transaction demand of customers... But, off late, we have noted somewhat lesser inflow coming back from circulation.
"We have not got this investigated, but you can assume that this one note is most suitable for people to keep with themselves. There has been some tendency of some people using Rs 2,000 notes, but that does not affect the overall supply of the Rs 2,000 notes."
Justifying the higher currency circulation in the system compared to the pre-demonetisation period, Garg said: "At the time of demonetisation, the currency in circulation Rs 17.5 lakh crore. Currency in circulation now is about Rs 18 lakh crore. So it is in absolute numbers higher than at the time of demonetisation."
"But demonetisation is one-and-a-half years earlier... if we had taken that growth path, we would had still been much higher. If the currency had grown as it was growing before demonetisation, probably it would have been somewhere at the level of Rs 22-23 lakh crore. So, we are at a lower level."
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Rupee falls 5 paise to 90.23 against US dollar in early trade
Mumbai (PTI): The rupee depreciated 5 paise to 90.23 against the US dollar in early trade on Monday, driven by rising crude oil prices and an unabated outflow of foreign funds.
According to forex traders, a volatile geopolitical situation and concerns over further US tariffs on Indian exports fueled the selling of Indian stocks by foreign institutional investors, even as traders awaited cues from macroeconomic data to be released this week.
At the interbank foreign exchange, the rupee opened at 90.23 and stayed weaker by 5 paise from its previous closing level.
On Friday, the rupee fell 28 paise to close at 90.18 against the US dollar.
Meanwhile, the dollar index, which measures the strength of the greenback against a basket of six currencies, was trading 0.14 per cent lower at 98.75.
Brent crude, the global oil benchmark, was trading 0.13 per cent higher at USD 63.44 per barrel in futures trade.
On the domestic equity market front, the 30-share benchmark index Sensex declined 356.49 points or 0.43 per cent to 83,219.75, while the Nifty dipped 94.90 points or 0.37 per cent to 25,588.40.
Analysts said several factors like the development related to Venezuela, Iran and US President Donald Trump's possible move towards Greenland are influencing the sentiment worldwide.
Foreign institutional investors offloaded equities worth Rs 3,769.31 crore on Friday, according to exchange data.
The latest weekly data released by the Reserve Bank of India (RBI) on Friday showed India's forex reserves dropped by USD 9.809 billion to USD 686.801 billion in the week to January 2. In the previous reporting week, the forex reserves had jumped by USD 3.293 billion to USD 696.61 billion.
