Cash purchases of fuel at petrol stations using Rs 2,000 notes have soared to almost 90% of daily sales
Published Date – Monday, 5/22/23 at 11:50pm
Cash purchases of fuel at petrol stations using Rs 2,000 notes have soared to almost 90% of daily sales
New Delhi: Cash purchases of fuel at petrol stations using 2,000 rupee notes have soared to nearly 90% of daily sales as buyers rushed to bid on the withdrawn notes.
Petrol pump dealers said cash sales were only 10% before Friday’s surprise announcement of the withdrawal of Rs 2,000 notes but now customers are using the withdrawn notes for small purchases of Rs 100/200 in the expectation that gas stations will return their change.
They have now asked the Reserve Bank to instruct banks to provide enough small denomination notes to help service customers smoothly.
“Even for small purchases of Rs 100 to Rs 200, most customers try to use Rs 2,000 notes and change is expected at petrol stations, so there is an extreme lack of change at petrol outlets across the country,” said All India Petroleum Dealers Association president Ajay Bansal said in a statement.
Gas station dealers have been requiring customers to use a credit card or digital payment method to buy fuel, the company said.
“Before withdrawing Rs 2,000, we used to receive only 10% of our cash sales in Rs 2,000 notes, but now nearly 90% of the cash we receive at our outlets is only in Rs 2,000 notes and we have to transfer the same The money is deposited in the bank,” it noted.
After November 8, 2016, when petrol pumps and some other essential everyday services were allowed to accept the old 500 and 1,000 rupee notes, nearly 86 percent of the notes were demonetized. However, petrol pumps soon became conduits for laundering banned banknotes, leading the government to withdraw the facility prematurely.
This time, the gas station also became the channel to withdraw the withdrawn currency.
“We have also asked the RBI to provide guidance to banks to provide sufficient small denomination notes, especially at gas stations, to replace Rs 2,000 notes so that we can service our customers smoothly,” Bansal said.
He expressed concern that petrol pump dealers would face problems again, as they did during demonetization in 2016, when most dealers received income tax notices or were lodged “without fault”.
“Furthermore, digital payments which used to account for 40% of our daily sales have suddenly dropped to 10% of daily sales, and our cash sales have increased significantly as customers desperately want to use Rs 2,000, which will again bring us back from the income tax authorities. Trouble,” he said.
Notes of Rs 2,000 make up about 10.8% of the total currency in circulation, or Rs 36 trillion. These notes can be redeemed or deposited until September 30, 2023.
This time, the amount of currency being withdrawn is significantly smaller and the time to complete the process is more spread out compared to demonetization.
In November 2016, 85% of the currency in circulation was withdrawn and the old 500 and 1,000 rupee notes were no longer legal tender. The whole process is completed in a short time.
This time around a small amount of currency in circulation will be affected (10.8%) while the Rs 2,000 note remains legal tender. The entire process will be completed by September 2023.
