Authorities have blamed the shortage on “unusual demand.”

“In the current month, in the first 13 days itself, the currency supply increased by Rs45,000 crores,” a notice by the press information bureau stated. Usually, the average is around Rs25,000 crore.

In order to meet the demand, the RBI will be printing more notes over the next few days. “We print about Rs500 crore worth of Rs500 notes everyday. We have taken steps to raise this production five times. This (step) alone is more than enough,” Subhash Garg, the economic affairs secretary said on April 17. He added that there is an additional Rs2 lakh crore of currency in the government and the central bank coffers, brushing aside any cause for alarm.

On its part, the RBI is taking steps to move currency to areas witnessing unusually large cash withdrawals, it said in a release on April 17.

A few unanswered questions

Normalcy is expected to return in about a week, according to the finance ministry. But what exactly sparked this shortage?

“An increase in economic and farming activity since September last year could have had added fuel to the fire,” said the CEO of a private sector bank.

Another query that is being raised is the government’s preparedness. “If they knew there is a problem and it had been spreading slowly but steadily,” said the head of an ATM service provider, “shouldn’t they have increased the currency supply a month ago?”

Anwesha Ganguly contributed to this story.

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