Within a fortnight of Prime Minister Narendra Modi’s announcement to ban high currency notes, several ministries in his government went into a tizzy tackling problems, particularly in labour-intensive sectors.
However, the government now feels the storm has passed. The string of complaints and representations that came last month owing to cash crunch from various trade and industry bodies have slowed to a trickle, a senior union minister said. As the 50-day timeline sought by the Prime Minister, who had promised a “new India in the new year” nears its end, the central government and BJP are heaving a sigh of relief saying the “worst is over”.
The BJP was hoping to cash in politically on demonetization and the Prime Minister’s assurance to fight black money. Some party MPs had expressed apprehensions about the impact of the inconvenience faced by people because of the cash crunch on the party in the forthcoming elections, particularly in Uttar Pradesh. Internal ground reports also indicated that demonetization would give the BJP an advantage. The party national executive is holding its meet, the last before assembly elections in five states, next week in the Capital. Ahead of the meet, Modi will be holding a rally in Lucknow.
The government has indicated that various departments have received reports from the ground showing that things had started improving over the past fortnight and the story of demonetization woes was nearly over. While it was not entirely ruling out the flip side of its impact on the economy, it saw it as a temporary phase that was waning faster than expected, the sources said.
One by one, the woes of various sectors because of cash crunch in the aftermath of demonetization had to be addressed, but the situation is now returning to normal, sources said, adding that the labour force which had migrated was getting back and the use of digital mode for transactions was picking up.
The worst affected were around half a dozen labour intensive sectors including handloom, carpet weavers and metal pickers, where payments were made in cash.
Worried that the cash crunch would hit farmers in the northern states, including poll-bound Uttar Pradesh, where the sowing of the rabi crop was just starting, the government had asked NABARD to ensure credit flow in rural areas in the end of November, sources said. The money flow into metropolitans was cut down to increase availability in rural areas.
The government had also faced demands from the RSS-affiliated Bharatiya Kisan Sangh (BKS) to withdraw the decision to scrap import duty on wheat or give an assurance that the rabi crop would be bought at the prevailing MSP.
Government sources said the move was aimed at avoiding any knee-jerk reaction in case of shortage of wheat and that import was not mandatory. It is understood that the government has given an assurance that the concerns would be kept in mind.