Mumbai, Dec 8 (KNN) In the Press Conference held on the Monetary policy, RBI announced that against demonetisation of currency notes worth Rs. 11.55 lakh crore, new notes of less than Rs.4 lakh crore have been supplied. Elaborating the currency policy of the central bank, Mr. R Gandhi, Deputy Governor, RBI, mentioned that “The Reserve Bank and the Central Government were conscious of certain immediate difficulties that the public at large could face and all efforts were made to minimise them and mitigate them”.

However, the reality is something different. Against withdrawing currency worth nearly Rs. 12 trillion from the system, RBI has introduced only Rs. 4  trillion, or 25%. So no guessing why the queues outside the Banks are not decreasing.

What is  more surprising when people are running around ATMs in search of cash, RBI has announced printing of new notes of lower denomination…. As there is no new Banknote Press, this will no doubt lead to lesser printing of higher denomination notes and lesser supply of currency in value terms.

In a statement Gandhi has also “strongly advocate the public to switch to digital payment modes given that there are several options, there are adequate safeguards and there is an increasing acceptability of this mode of payment by a large number of recipients”. But how  the man on the street who does not have a debit or credit card will go for ‘digital’ mode, no one is ready to answer.

Growth in money supply is a common phenomenon when a country grows and even in France which is world’s leading ‘cashless’ economy, the money supply has increased by nearly 10% during July 2015 and July 2016, in terms of what the economists say’M1’ parameter.

In contrast, in India the currency in circulation has plunged by nearly 750000 crore till 2^nd December. While this may be a temporary phenomenon, the ‘could not care less’ attitude of RBI towards currency supply is  shivering the economy.

So while the ‘Cashless’ or less cash drive of Mr. Modi may be well appreciated, are they going to throttle the economy towards ’PayTMs’!!

Needless to mention the biggest sufferer of this cashless or less-cash drive are the micro and small enterprises. According to Anil Bhardwaj, Secretary General, FISME, demonetisation has hit 80% of small businesses and the sector is staring at apocalypse.

A glaring  glitch of the much hyped ‘PayTM’ type wallets are most of them are not ‘Payment banks’ so cannot pay cash to the recipient. Nor it is possible for someone without a Bank account to put money in these wallets. So are not these operating in ‘limbo’ for the street hawker or the petty Paanwala.

RBI Governor has already  projected more than half  per cent  drop in domestic value addition thereby wiping out nearly Rs. 50000 crore from the economy. While the learned Governor has cited other reasons for the drop, the opinion of the global economic community is this is primarily due to the demonetisation. (KNN/ DB)