THE HINDU Editorial Vocabulary - April 19, 2018 - Topic 2

Cash is still king: On ATMs running dry

Nearly 18 months after the government’s decision to scrap currency notes of Rs.500 and Rs.1,000, which accounted for over 86% of the currency in circulation at the time, large parts of India are in the throes of a severe cash crunch again. The government started acting belatedly on Tuesday in response to reports of cash shortages from States including Telangana, Andhra Pradesh, Karnataka and Madhya Pradesh over a fortnight. 

Terming the shortage a manifestation of an ‘unusual spurt in currency demand’ over three months, the Finance Ministry has emphasised that the first 13 days of April recorded an increase in currency supply of Rs.45,000 crore. Yet, thousands of automated teller machines are either not functioning or not dispensing adequate cash as banks are reluctant to divert cash to them at the cost of customers visiting branches for withdrawals. The Ministry has asserted that over Rs.1.75 lakh crore of cash lies in reserves, which may now be deployed to meet the demand. On its part, the Reserve Bank of India has claimed there is enough cash in its vaults, but it has ramped up the printing of all notes. At the same time, it blamed the shortages on logistical issues of replenishing ATMs and said it is moving more cash to regions that witnessed high cash withdrawals.

Theories abound on how upcoming elections, starting with Karnataka and possibly ending with the Lok Sabha polls in 2019, have prompted a large-scale cash management exercise among political parties. Part of the retail love for cash is also being attributed to depositor fears about the impending Financial Resolution and Deposit Insurance Bill that makes it possible to deploy investor savings to bail out stressed banks and financial institutions. There could be some truth in these explanations, but the genesis of the current cash crisis is firmly rooted in the lack of system-wide thinking that went into the Centre’s big-bang note ban gambit. The government may have chosen to go for Rs.2,000 notes post-demonetisation to remonetise the economy faster, but with lower denomination notes taking longer to flow freely, circulation wasn’t efficient and the big note has become a preferred mode for hoarding capital. That a plan to re-introduce Rs.1,000 notes was later junked didn’t help; nor did the difference in the sizes of the new notes. As the RBI noted on Tuesday, recalibration of ATMs is still under way for the Rs.200 note. Demonetisation may have been aimed at weeding out black money, but perpetuating dependency on the Rs.2,000 note ignores an age-old heuristic for currency management that every denomination should be 2 to 2.5 times its preceding denomination. The current cash crunch shows how the consequences of the overnight demonetisation of November 8-9, 2016 continue to haunt us.

Vocabulary

Scrap: a small piece or amount of something, especially one that is left over after the greater part has been used.

Example: I scribbled her address on a scrap of paper

Synonyms: fragment, piece, bit, snippet, shred, offcut, oddment, remnant

Circulation: movement to and fro or around something, especially that of fluid in a closed system.

Example: An extra pump for good water circulation

Synonyms: flow, motion, movement, course, passage

Severe: strict or harsh.

Example: The charges would have warranted a severe sentence

Synonyms: harsh, bitter, cold, bleak, freezing, icy, arctic, extreme

Fortnight: a period of two weeks.

Example: In the last seven years at home there were regular fortnights in hospital: periodic detention, we called it.

Manifestation: an event, action, or object that clearly shows or embodies something, especially a theory or an abstract idea.

Example: The first obvious manifestations of global warming

Spurt: a sudden gushing stream.

Example: A sudden spurt of blood gushed into her eyes

Synonyms: squirt, jet, spout, gush, stream, rush, surge, floo

Adequate: satisfactory or acceptable in quality or quantity.

Example: This office is perfectly adequate for my needs

Synonyms: sufficient, enough, requisite; acceptable, passable, reasonable

Reluctant: unwilling and hesitant; disinclined.

Example: She seemed reluctant to discuss the matter

Synonyms: unwilling, disinclined, unenthusiastic, resistant, resisting

Replenish: fill something up again.

Example: He replenished Justin's glass with mineral water

Synonyms: refill, top up, fill up, recharge, freshen

Attribute: a quality or feature regarded as a characteristic or inherent part of someone or something.

Example: Flexibility and mobility are the key attributes of our army

Synonyms: quality, characteristic, trait, feature, element, aspect, property

Junk: discard or abandon unceremoniously.

Example: Sort out what could be sold off and junk the rest

Synonyms: throw away/out, discard, get rid of, dispose of, scrap, toss out

Perpetuate: make something, typically an undesirable situation or an unfounded belief continue indefinitely.

Example: The law perpetuated the interests of the ruling class

Synonyms: keep alive, keep going, preserve, conserve, sustain, maintain

Consequence: a result or effect of an action or condition.

Example: Many have been laid off from work as a consequence of the administration's policies

Synonyms: result, upshot, outcome, effect, repercussion, ramification