Arunachal crippled between demonetization & remonitisation

 

* SBI Itanagar, Naharlagun ATMs need Rs 5 cr daily

By Pradeep Kumar

ITANAGAR | Mar 28 | Arunachal Pradesh caught in a catch 22 situation is still struggling to come out of the dance demonitisation announced by Prime Minister Narendra Modi on Nov 8-9, 2016 last to join remonitisation process.

The decision had hit this land-locked state with only 180 bank branches, including 57 SBI branches, the lead bank while financial inclusion sill remains a mirage. The masses facing acute crisis of small (5,10, 20, 50 and 100) currency notes had raised hue and cry in the Capital Complex with the ATMs remaining closed recently. However, Vijaya Bank’s ATMs three at Itanagar and one at Naharlagun were functional.

One could imagine the condition of poor tribal people who are used to cash transaction including in remote and far-flung areas, particularly since discarding their traditional barter system. The problem grew with  non-availability of small currency note as the poor cannot be expected to use Rs 500 or Rs 2,000 notes. The withdrawal amount limited to Rs 24,000 intensified the agony further till lifting on 03.02.17 while digital money transfer remained a far cry with mobile operation remaining a distant  Digidham.  

However, a senior bank officer today disclosed that receipt of few crores currency notes gave some relief as the notes have been dispatched all over the state. But, the requirements are huge as about Rs five crore is withdrawn from Itanagar and Naharlagun ATMs each daily. Itanagar SBI region operates 109 ATMs besides others operated by its Tinsukia and Tezpur regions while all banks operate ATMs as per RBI guidelines.

Demonitisation added salt to the injuries of bank account holders and the socio-economic development of this agrarian society was crippled. This state has been contributing immensely to India’s GDP through huge sale proceeds of kiwi, India’s highest producer, and supplying other agri-horticulture products to rest of NE India and Bangladesh.

“Monetization is a hollow move’, wrote India Central Programme, International Growth Centre (IGC) country director Pronab Sen as India lost 86% of its monetary base. At least Rs 12,000 crore would be spent in printing new notes and nobody knows how much in the logistics of exchanging the currency,” Sen said and on 08.12.16 had questioned: Will such huge expenditure not cause inflation? If yes, the masses should be ready to face it soon.

The cost of replacement of old ATMs by new ones once added  would undoubtedly result in severe inflation and the burden would not be on the black money hoarders whose number could by minuscule but on the common masses.

The cost of withdrawing high-denomination currency notes to wipe out black money from the country will be about Rs 1.28 lakh crore during the 50-day window till December 30, the Centre for Monitoring Indian Economy (CMIE) ET Bureau reported on 25.11.16.

The overall cost could be much higher, the private economy watcher estimated. The demonitisation had  invalidated 86% of the Rs 17.8 lakh crore of currency that was in circulation on October 28 while the effects of a sudden withdrawal of liquidity from markets,” CMIE said in a report on  24.11.16.

Emphasising that all estimates are conservative and limited to the 50-day window, CMIE said the Govt and the RBI are estimated to bear a cost of Rs 16,800 crore, largely on account of printing new currency notes and transporting them to banks, ATMs and post offices.

Nobel Laureate Amartya Sen had called Modi Govt’s demonetisation move “despotic action that has struck at the root of economy based on trust,” PTI quoted him  on 30.11.16. “It (demonetisation) undermines notes, it undermines bank accounts, it undermines the entire economy of trust. That is the sense in which it is despotic,” ANI quoted Prof. Sen telling a TV channel.

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