Cash crunch hits welfare schemes hard in Telangana, AP

​Hyderabad/Amaravati: Efforts are on to rush cash to Andhra Pradesh and Telangana which are reeling under an unprecedented cash crunch lately. The banks are running out of cash and the ATMs had become mere show pieces almost in every town. Only in cities, if one is lucky, one could get some cash.

The unusual cash crunch, with Rs 2,000 denomination notes disappearing as if they had never existed for reasons not understood, has brought back the horrors of demonetisation days.

Even as the SBI, the largest public-sector bank, is making arrangements for rushing cash to the two Telugu states, the Telangana government, jittery over the prospects of development works taking a back seat as most of them are labour intensive, has sounded an SOS to the Centre.

The state government feels that for development works to continue, the contractors would need money in cash to pay the workers. If the contractors do not get the cash, the development works would come to a grinding halt which is bothering the government to a great extent.

An SBI official said that the bank had constituted a cash management committee involving all the scheduled banks to monitor cash flow under instructions from the RBI. "The cash has not arrived from other states so far into the two Telugu States yet. It might take two or three days," a senior official of the SBI told The Hans India, adding that efforts are underway to bring surplus cash reserves from their branches in other states to Telangana and Andhra Pradesh.

"We are confident the currency crisis will ease out by this month end in the two states. At present we are making an audit of how much surplus cash is available with us in other states and would airlift cash accordingly to the two states,” he said.

The SBI authorities said that RBI has pumped in Rs 75,000 crore post demonetisation into Telangana and Rs 55,000 crore into AP. Although the banking regulator is sending Rs 2,000 crore each to the two Telugu states per month, cash requirement has gone up in the states due to various reasons, including increased realty trade, withdrawal of cash from banks fearing the implications of the Banking Regulation Act, 2017. It is also said money has vanished from the banks because to fund elections in Karnataka. On the instruction of the RBI, SBI has constituted a Cash Management Committee involving all scheduled bank authorities to monitor the cash flow in every state.

Unnerved by the continuing cash crunch problem, the Telangana government has requested the Union government to come to the rescue of state as many developmental programmes and revenue collections will be hit badly with poor cash flows.

Top sources said that State Finance Secretary K Ramakrishna Rao and other state officials called those of the Union Finance Ministry and submitted a detailed report on the impact of the cash crunch on the state economy mainly the execution of the infrastructure development works like irrigation projects, Mission Bhagiratha, Mission Kakatiya, two bed room housing and road network development schemes taken up which are labour intensive and the workers would have to be paid their wages in cash.

They told the Delhi officials that contractors had stopped payments to the work force engaged due to scarcity of the currency. “Most of the infrastructure development works are in an advanced state of completion. Cash crunch at this juncture would throw everything awry,” an official said.