Understanding the Meaning of Cash Crunch

As per the dictionary meaning of the word, “cash crunch is a state when an organization does not have enough money to operate successfully or in the normal way”. But we are not talking about this cash crunch here, there is one more problem that every Indian faced, post the November 30 decision. The crunch that demonetization caused.

While everyone is aware of the reasons that led to demonetization, only a few know why it took so long to get it resolved.

220 crore new notes released until December 19

The Reserve Bank released 220 crore new notes to banks for distribution to the public between November 10 and December 19. But that wasn’t enough, given the huge population that we have.

The sudden release of cash could trigger a rush

The fewer number of available notes resulted in a rush once new notes were released, and hence RBI issues new notes gradually (and not in one go).

Printing slowed

As per the sources and the officials, this shift (of notes) slowed printing at two mints for nearly three weeks.

Printing of Rs 500 postponed

As you can remember, the 2000 notes were released first and the 500 notes came quite later. It was because Rs 500 notes had to be stopped and shifted to a different mint after faults were detected in a few lots.

Recalibrating ATMs

The new notes differ from the older ones in size as well, this made the recalibration mandatory for all the ATMs to disburse new notes.

No matter how many times the demonetization is talked about, this practice has to be put in motion for taking care of the increasing corruption from time to time. Various other countries have also done it and India was in dire need of this, due to minimal usage of digital money in our economy. But is the corruption under check now?

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