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15 theories about why India is facing a cash crunch a year and a half after demonetisation -Rohan Venkataramakrishnan & M Rajshekhar

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From ATM logistics to deliberate lack of supply to Nirav Modi, there are many explanations for the shortage.

One of the most unusual things about the cash crunch that is affecting a number of Indian states, which the government officially acknowledged on Tuesday, is that the causes of the shortage are unclear. In various statements, government officials have pointed the blame at an “unusual spurt” in currency demand, although they have yet to convincingly explain the reasons behind that spike and why it has come now. Beyond the official statements, others have added many more potential theories in an attempt to explain what seems to be a sudden spell of ATMs running dry.

The lack of clarity on what is happening in the economy, from trustworthy Gross Domestic Product or employment numbers to the government’s deliberate opacity over demonetisation figures, has led to much speculation about what might actually be happening here. Some of the theories do not go beyond describing what is happening. Others seem less tethered to facts than a need to explain away the crunch. A third set, however, raise more fundamental questions about the currency shortage.

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