NEW DELHI : (Commoditiescontrol) – The RBI governor stated on Sunday that there were sufficient notes to go around improving liquidity in the banking system but there appears no ease in common people’s pain as they are still queuing up outside bank counters and ATMs when 20th day of demonetization of high value currency notes of Rs. 500 and 1000 is in progress.
Farmers’ agony is getting deeper day by day as business activities in the agriculture produce market have been severely affected due to cash crunch. Arrivals of several crops have declined as demand slowed down due to payment crisis. The agro-economists foresee current liquidity crisis as an assault on the livelihood of farmers as they are in distress when peak rabi sowing season is going on.
Devinder Sharma, a distinguished food and trade policy analyst, has criticized government agriculture policy and said current crisis is the direct attack on farmers’ livelihood, giving rise to agrarian crisis. According him, government should focus on the pricing of agriculture produce in the policy so that famers will be encouraged to grow more food grains which will help in reducing our dependency on imports for wheat, pulses and other agri commodities.
“If farmers don’t get reasonable prices of their produce, they will suffer,” said Sharma. Currently, prices of most of the agriculture produce are down due to liquidity squeeze in the market if this persists longer, farmers will quit farm works and start moving to cities to explore other occupation for earning their livelihood, he added.
According to Sharma, “While millions have been literally driven out of their homes, offices, shops and farms to queue up for exchanging the outlawed currency notes or getting their hard earned money from the banks, the demonetization exercise is possibly aimed at saving the banking system from a near collapse.”
“What appears to be an assault on black money is essentially a collateral advantage. There is no example that I know where black money has been unearthed using demonetization,” he pointed out.
Although rabi sowing has picked up last week but it may fall now as the farmers are facing problems in buying seed and fertilizers as banks and ATMs are not dispensing sufficient money, said the agricultural expert.
Rabi crops have been sown in 327.62 lakh hectares in the ongoing season as per the reports of the union agriculture ministry released on November 25 while the acreage was at 313.17 lakh hectares in the same period last year.
The area under wheat till November 25 increased to 127.15 lakh hectares compared to 117.32 lakh hectares in the corresponding year-ago period.
However, total area under rabi crops was at 638.09 hectares last year so, next 15-20 days will be crucial for rabi farming. If farmers don’t get ease in getting cashes from banks properly, they will not continue their farm works which will result in a decline in rabi crops sowing, said an expert of rural economy. Besides, they will also need cash for irrigation and fertilizers for nurturing the crops, he added.
Sugar prices are down due to cash crunch in the market which impacted retail demand for the sweetener. According to Devendra Sharma, slow down in sugar market may lead to delay in payments of cane growers by sugar mills, hence, famers are badly affected with liquidity crisis emerged after a ban on high value notes.
Former Prime Minister Dr. Manmohan criticized government’s current move and called demonetization of high value currency as 'monumental mismanagement' by Narendra Modi government.
According to him, “This will hurt agriculture, small industry and everyone in the unorganized sector.” Dr. Singh who is also a distinguished economist has anticipated a fall by 2 percent in GDP growth this year.
In a move to unearth black money and check flow of fake currency in the country, Prime Minister Narendra Modi on November 8, 2016 announced demonetization of Rs 1000 and Rs 500 notes effective from that mid-night.
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