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Rubbing salt worth Rs 400/kg into people’s wounds?

Published on: November 12, 2016 | Updated on: November 16, 2016

Rumour of Salt Shortage Triggers Panic

Salt at Rs 400/kg? Wake up India, this is a crisis! Or, is it?

Yesterday, thanks to rumours being spread about a looming shortage of salt in some parts of the county, rushing to the nearest grocery shop to stock up on salt was the order of the day. As a result, opportunistic shopkeepers began selling salt at prices that touched a peak of Rs 400/kg in many parts of U.P.

The rumour generated panic on a scale that was reminiscent of the Lord Ganesha drinking ‘milk’ frenzy in the mid-90s. The current rumour was a double whammy for people who have been at their wits end trying to figure out the consequences and impact of demonetization of Rs 500 and Rs 1000 notes.

Such was the panic that police had to be deployed in many parts of U.P to control restless crowds that were building up outside grocery shops. As it is, the state governments across the country have been trying to cope with restless crowds in long lines outside banks and ATMs, trying to deal with a situation no one was prepared for.

In fact, Chief Minister of U.P, Akhilesh Yadav, had to instruct his Principal Secretary of Food & Civil Supplies to issue a statement of assurance on availability of adequate salt stocks in the state and also instructed him to ensure that there was no shortage or bottlenecks in supply of salt reaching retail outlets. The Union Minister of Food & Civil Supplies Ram Vilas Pawan, too, issued a statement assuring people of adequate salt stocks in the country.

By evening, the panic had subsided but the damage was done.

The fact

There is NO shortage of salt, not now and not in future. India produces around 220 lakh tonnes of salt, out of which 60 lakh tonnes is kept for domestic consumption. The rest is used for industrial purposes and for export. The government has sufficient buffer of salt stocks to reallocate for domestic consumption, should the need arise. The rumour of salt shortage is baseless and spread with malicious intent.

Panic – a fallout of demonetization

Most haven’t understood the reasons behind the government move despite a clear and unambiguous statement from the PM himself on national television, and this includes educated people. The communication gap resulted in people rushing to queue up outside banks, ATMs and post offices, trying to either deposit their earlier currency or withdraw smaller currency to meet their daily needs, since shops and other establishments were not accepting the new Rs 2000, citing small change shortage.

Ever since PM Modi’s dramatic announcement on the 8th of November, all sorts of rumours have been making the rounds and gullible people have been falling for it. The shortage of salt was yet another of those rumours aimed by vested interests to cause panic among an already harried people.

Poor planning and implementation

The government must accept responsibility for poor planning and poor implementation of this dramatic step to demonetize currency. The government completely failed to predict the fallout and take adequate steps to ensure people would not be inconvenienced.

The secrecy behind the move is well understood and accepted, but not making adequate arrangements for additional stocks of Rs 100 and Rs 50 notes, is definitely a result of poor anticipation by the those in Finance Ministry.

The government has announced that upto Rs 2,000 through ATMs and Rs 4,000 from bank accounts will be allowed. The problem that people are facing is that there are no stocks of Rs 100 and Rs 50 notes, which could have easily been given to people on demand and wouldn’t have caused the long serpentine queues that is being witnessed daily. Same for ATMs, which should have never run out of cash, if banks had adequate stocks and timely refill schedule.

The fact that the new Rs 500 note will take time to enter circulation is understood but lack of availability of smaller currency is a result of poor anticipation.

Another area where the government has failed is in predicting how people would try and convert illegal money. Ask any chartered accountant worth his salt and he will list out a slew of measures on how and where large stocks of illegal currency can be invested and converted into white money.

It is well known that hawala traders, jewellers, real estate companies, wholesale traders, politicians and political parties, all hold large amounts of cash at any given point of time and they would all go into a frenzy to convert or divert the large stocks that they hold. Why didn’t the government prepare for this and ensure all government agencies, backed by police and paramilitary forces, were adequately deployed at critical places and to monitor movement?

The raids etc that have taken place are an afterthought and were not planned, besides there have been virtually no arrests. Do the same rules apply to the common man?

Word of caution

In the meantime, the public is well-advised NOT to subscribe to such rumours like the one on salt. The currency shortage will be over within a week or so. Till then, let’s all be patient and give the government a chance to correct what has become an institutionalized wrong.

Read More…

Can India really become cashless?
Why is Rs 500 Note Banned in India?
Features of New Rs 500 and Rs 2000 Currency Notes
Rs 500 and Rs 1000 Note Ban Imapct on Economy, Real Estate and Other Sectors
Why India Banned 500 Rupee Currency Notes
Rs 500 and Rs 1000 Notes Banned, New Rs 2,000 Note to be out on 10th November
Will India be able to bring back the Black Money?
Modi’s Vision for Banking Industry
Black Money Law: Will it Make a Positive Difference?


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