The story is not great here either:
Another negative fallout of demonetisation is the proliferation of soiled and tattered notes in smaller denominations such as Rs10, 20 and Rs50. This is a menace in certain areas but since the problem is largely in non-metros and does not affect the ATM-using crowed, it has remained largely out of the public eye. After all, nobody cares about the issues affecting rural or less privileged classes whose livelihoods are earned in smaller denomination currency. (See feedback on soiled notes at the end of this report).
Based on data gathered through multiple sources, we took up the issue with the Reserve Bank of India (RBI). To his credit, RBI Governor Dr Urjit Patel responded immediately and we had an opportunity to present the data to senior officials. The RBI has assured us of a quick action but officials who spoke to us do not want to be quoted. Let us first look at why the RBI’s clean note policy has gone for a toss after demonetisation last year and what can be done about it.
It is now well acknowledged that RBI did not have enough time to prepare for demonetisation and dependence on Rs2,000 notes as the main denomination for re-monetisation was a mistake. So it appears that the printing of Rs2,000 notes has been stopped after 3.8 billion notes were printed. Instead, the printing of new Rs500 notes, which were in acute short supply was cranked up and 18 billion of these notes have now been printed. The printing of Rs500 notes too has stopped. A new denomination of Rs200 has been introduced and adequate supply is expected to be available by the end of October or early November, say RBI sources. The Rs100 and Rs50 denomination is less of a problem in cities, since ATMs require a certain minimum quality to be used for machine counting.
But it is a different story among small traders, vendors and daily wage earners in cities and especially in smaller towns. We have shocking feedback from Amritsar, Goa, South Odisha, Chandigarh, Ranchi and even in Gurgaon, Mumbai suburbs, Chennai and Bengaluru. Someone from Bengaluru even reported getting a patched up Rs100 note from an ATM in the city.
Lots more details and tweets of people’s woes there…
These days monetary economics has been limited to just equations and math jazz. But there was a time, currency/coin linkages were central to figuring monetary economics. Hence, people just could not see beyond black money when demon was announced. Now all these fallouts are coming through…