Is India running out of cash again?
This week, in the central Indian state of Madhya Pradesh, a farmer pawned his wife’s jewellery to a moneylender to raise money for his daughter’s wedding. He said he had been visiting the bank for two days to pick up his money, but had been turned away because they had run out of cash.
It brings back fears of the chaotic scenes across India after Narendra Modi’s ruling BJP government’s November 2016 ban on high-value currency notes, which then accounted for 86% of the cash in circulation. Mr Modi had said the move was a shock government crackdown on illegal cash.
Why is there a sudden cash squeeze in at least five states, home to more than 300 million people?
For once, as the finance ministry says, there has been an “unusual surge” in the demand for cash since February. In the first 13 days of April itself, currency in circulation had leapt by $7bn, mostly in the states hit hardest by the shortage. Some officials believe people could be hoarding cash, but it is not entirely clear why.