Massive support for demonetisation but implementation patchy: Central team

A special team of bureaucrats sent to states for an on-the-spot assessment of the demonetisation drive informed the government that though there was massive support from the people, the implementation was patchy.

Cash crunch in banks and ATMs, shortage of smaller denomination and Rs 500 banknotes, ATMs not recalibrated and post office network not optimally used were some of the key problems that the central team flagged in its report submitted to the Union finance ministry last week.

“In both urban and rural areas, we found the situation will improve if the cash circulation is increased and ATMs are replenished at regular interval,” said a bureaucrat who visited a north Indian state.

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The team was set up to assess the implementation of central measures in the wake of Prime Minister Narendra Modi’s November 8 announcement that Rs 500 and 1,000 banknotes — which accounted for about 86% of the currency in circulation — will no longer be legal tender.

Barring some areas in states such as West Bengal and Bihar, where farmers expressed discontent, the central team found that people by and large supported the Prime Minister’s decision with the hope that it would weed out black money and rein in corruption.

“Despite having to wait in long queues, people said that Modi has done a good thing. It was all about Modi, not the NDA government’s decision. People in rural and urban areas in states, including Uttar Pradesh, Rajasthan, Himachal Pradesh, north-east, said they are willing to suffer the inconvenience as they feel the end result will be good,” said a member of the team that visited a northern state.

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However, it was also noted that in the short term some sectors such as retail and construction will be adversely hit.

“In some of the northern and western states, for instance, the construction sector has witnessed a revenue dip by up to 30%,” said another bureaucrat.

Farmers in a few eastern states expressed discontent over the drive.

“This is the sowing season and the farmers have been adversely hit by the cash crunch. Many of them do not have money to pay labourers. The government needs to come up with more measures to help them — including increasing the limit of Kisan credit cards,” said a bureaucrat.

The central team has recommended to the government to undertake large-scale awareness campaigns to sensitise people about cashless transactions and its benefits.

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“States will have to ramp up their infrastructure to facilitate e-payments. People in smaller towns and villages have to be sensitized,” a bureaucrat who visited one of the Union territories said.

Also, increasing the use of the country’s post office network and extending banking time by a couple of hours till December 30 were suggested.