Demonetization may not have been such a pain if India had more ATMs to feed the country’s billion plus population. The serpentine lines outside every ATM in the country following Prime Minister Narendra Modi’s decision to ban the high value currency in November last year showcased the agony of people rushing to exchange their debunked currency with the newly minted bills.

Until December last year, India had only two ATMs serving 10,000 people, as per Reserve Bank of India. That fares poorly when compared with BRIC nations- 17 ATMs in Russia, 11 for Brazil, 8 ATMs in China, and 7 ATMs in South Africa. Only three Indian states and a union territory — Manipur (15), Goa (16), Uttrakhand, (19), and Chandigarh (8) could reach up to that level.


Impact of demonetization

After rendering 500 and 1000 rupee notes useless overnight, Indian government won laurels as people saw it as a bold step, one without precedence, in direction of combating rampant black money problem. However, public sentiment altered swiftly as government’s bad planning to exchange old notes for new, forced individuals to line up outside ATMs and banks often for longer hours.

It got worse, when ATMs started running out of cash in middle of the day and people had to go back empty handed only to return again the next day. Newspapers and television news were brimming with pictures and stories of hapless people taking leave from work to line up outside few ATMs in their neighborhood and often times far off to get new currency bills.

As per RBI data, atleast ten states had fewer ATMs than the national average, among them bigger and highly populated states like Uttar Pradesh, Madhya Pradesh, and Rajasthan had just one ATM per 10,000 people.

Down south, states fared better with three or four ATMs per 10,000 people. With a network of over 72,000 ATMs, southern states have over 30% share of country’s two hundred thousand plus ATM network. 

The Future

India is slowly transitioning to digitalization. Many Indian villages are still without banks. A PWC report estimated that close to 167 million Indians were unbanked until last year. Despite several efforts to bank every Indian, government, in June 2017, acknowledged that 40% of country is still outside the ambit of formal banking.

With the hammer of demonetization, central government aimed at encouraging people to open bank accounts to swap old currency bills with new bills. However, as the prime minister unleashed the measure, on nation’s billion plus population without much planning, it distressed general population and more so the rural population, that is 67% of India’s economy.


Shreya Agarwal is a data journalist specializing in producing and reporting on major business stories. You can view more of her work here.