Demonetisation 2.0: cash crunch hits farmers, again -Banjot Kaur

-Down to Earth

More than creating financial crunch for upcoming sowing season, cash crunch is impacting the prices at which farmers are selling their produce

While the Union government is promising that cash crunch in the market would end soon, the farmers have already started feeling the pinch badly. The fears of demonetisation have come back for them. They are in soup because not only is this the harvest season, but also because they soon need to prepare for next round of sowing.

The states, which are facing the worst crisis, include Telangana, Andhra Pradesh, Bihar, Madhya Pradesh and Gujarat. Down To Earth spoke to farmers and experts in three of these states.

Ramanjaneyulu GV, executive director of Hyderabad-based Centre for Sustainable Agriculture says the cash crisis is a double whammy for farmers. “The harvest season is on and whatever crop the state government procures, it pays the farmers through cheques. But when farmers are going to withdraw money from banks, they return empty-handed. So they are not able to fulfil immediate needs,” he tells DTE. Secondly, this is the time when farmers purchase seeds, fertilisers and equipment for next round of sowing, which starts in June-July. “If farmers don’t have the money, how will they buy all this,” asks Ramanjaneyulu. He also observes that the cash crunch in villages is not a recent phenomenon. “From the last two months, the bank branches in villages were facing the deficiency of hard cash. It has reached peak now,” he adds. Farmers are in complete dark because there is no word from the Telangana government as to how and when the situation would ease.

Meanwhile, the governments of Andhra Pradesh and Telangana have claimed that they had informed the Centre about an impending cash crunch in February itself. Andhra Pradesh chief minister Chandrababu Naidu had written to Union finance minister Arun Jaitely on February 14, 2018 saying that Reserve Bank of India must provide cash worth Rs 5,000 crore to the state as it was facing huge crunch of lower denomination notes.

“The effect of demonetisation is still being felt on this sector. Now, we have another round of cash crunch. The situation would be alarming for farmers if this problem does not gets resolved on ground in 10 days,” food and trade policy analyst Devinder Sharma tells DTE. He adds that more than creating financial crunch for upcoming sowing season, it is impacting the prices at which farmers are selling their produce. “You are already seeing a crash in onion prices. If not direct, the cash crunch is definitely an indirect causal factor for it,” he adds. The prices of crops had dramatically crashed, incidentally after demonetisation. In a blog penned by Sona Mitra for Centre for Budget and Governance Accountability, she quoted an Indian Express column by Harish Damodaran, which said that despite the fact that the farm output for the last quarter of 2016-17 was 2.3 per cent higher year-on-year, the fall in prices by 2 per cent over the same period, resulted in the value of agricultural production rising just 0.3 per cent.

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