Chennai: Two years have passed since country’s biggest strike at black money took place and the now, in its latest report, the Union Agriculture Ministry has admitted that demonetisation badly hit farmers, who depend on cash for the purchase of seeds and fertilisers.
Demonetisation had made 87.5 per cent of existing currency, in denominations of Rs 500 and Rs 1,000, illegal tender. The Narendra Modi-led government has maintained that demonetisation was a necessary step to curb black money and a successful exercise. It has since 2016, defended demonetistion when in face of criticism from many fronts.
It has been regularly touted that farmers and smaller business entities were the worst affected by the note ban. After two years since the plan was implemented, the Union Agriculture Ministry has admitted that farmers were indeed badly affected.
In a meeting of the Standing Committee of the Ministry of Finance, the Ministry of Agriculture acknowledged that due to the lack of cash, millions of farmers were unable to purchase seeds and fertilisers ahead of the rabi season.
The Ministry informed the committee that when demonetisation was implemented, farmers were either selling their kharif yield or sowing rabi crops.
The report stated that demonetisation rendered all the cash they had in hand useless. This drastically affected farmers, said the Ministry, which discusses the effects of demonetisation. ‘Even government seeds could not be sold,’ the report said further.
Demonetisation also affected big farmers as they had to pay wages to the labourers working on their fields. But they went cash-strapped after demonetisation, the report said.
The Ministry said due to the shortage of cash, about 1.38 lakh quintals of wheat seeds of the national seed corporation were not sold.
The government had later allowed the use of old notes of Rs 1,000 and Rs 500 for the purchase of wheat seeds. But the relaxation, according to reports, did not do much to improve the situation.
On the contrary, the Labour Ministry in its report to the committee, commended demonetisation, saying that the move saw an increase in employment data in the subsequent quarters.
In the standing committee meeting, the opposition criticised demonetisation and demanded that the government should provide data on the loss of employment in the micro, small and medium enterprises. The committee has 31 members including former Prime Minister Manmohan Singh.
|‘World picked up but India went down’|
|Former RBI governor Raghuram Rajan in his public address at the University of California in Berkley recently, said for four years, from 2012 to 2016, India was growing at a faster pace before it was hit by two major headwinds.
Demonetisation and the Goods and Services Tax (GST) stalled India’s economic growth in 2017, he said, adding that India’s current seven per cent growth rate is not enough to sustain the country’s needs.
“What happened in 2017 is that even as the world picked up, India went down. That reflects the fact that these blows (demonetisation and GST) have really really been hard blows. Because of these headwinds, we have been held back,” he said.
“The two successive shocks of demonetisation and the GST had a serious impact on growth in India. Growth has fallen off interestingly at a time when growth in the global economy has been peaking up,” he said delivering the second Bhattacharya Lecture on the future of India.
Rajan, said a growth rate of seven per cent per year for 25 years is ‘very very strong’ growth, but in some sense, this has become the new rate of growth, which earlier used to be three-and-a-half per cent, Rajan said.
“The reality is that seven is not enough for the kind of people coming into the labour market and we need jobs for them, So, we need more and cannot be satisfied at this level,” he said.
Rajan had earlier reiterated that the move to cancel 87.5 per cent of the currency value was “not a good idea”.