Government's currency concessions might not help farmers – but many are willing to bear the pain

Two weeks after Prime Minister Narendra Modi announced that Rs 500 and Rs 1,000 notes would be demonetised, people across India continue to be hurt.

Taking note of this distress, the Reserve Bank of India and finance ministry have been issuing a series of notifications to allow various groups of people and kinds of payments to use the old notes. On Monday, it was the turn of farmers.

In a notification on its website, the finance ministry announced that farmers would be able to use old Rs 500 notes to purchase seeds from shops linked to the central or state government, to agricultural universities and public sector undertakings across the country.

Sowing for the rabi season is already underway in North India and harvesting is proceeding in southern parts of the country. At this time of the year, farmers need cash for more than seed inputs: they also need fertiliser and pesticides, wages for farm labour and for tractor operators.

“There are no seeds at government shops so we will have to go to private ones,” said Yashveer Arya, a farmers’ rights activist from Haryana. “Government shops have almost no demand from farmers and we also cannot take fertilisers with old notes.”

This concern is echoed at the southern end of the country as well, where few seeds can be had at government shops and supplies from agricultural departments is limited.

“Farmers can get advanced seeds only in the shops of private seed companies,” said K Balakrishna, a farmer activist belonging to the Communist Party of India in Tamil Nadu. “Only 28% of seeds across Tamil Nadu are sold by government shops and societies. So what is the meaning of allowing this?”

Horticultural seeds – crops of which are of higher value than regular food crops – are not available at government shops either, Balakrishna said. If farmers are to buy only from the government, some might have to change their sowing choices.

According to an estimate of the Bharat Krishak Samaj, a farmers’ advocacy group, half the seeds sold across the country come from the private and cooperative sectors.

“Farmers will manage to sow their crops, but they will have to do it at a higher cost,” said Ajay Jakhar, chairman of the Bharat Krishak Samaj. “Maybe they will use a different seed or one bag of urea instead of two. This is a good move [by the Finance Ministry], but it is not enough.”

Temporary pain

Despite the inconveniences and real impact on sowing and sales, farmers across the country believe the pains of demonetisation will be temporary and that this will benefit them in the long run.

Bhagwan Mandlik, a farmer from Nashik in Maharashtra, where harvesting is coming to an end, was categorical about this.

“I am not able to understand these farmers the media is showing,” Mandlik said. “Which farmer is there in this country who needs cash right away? All of us anyway buy seeds and fertilisers on credit before harvest ends. All that is happening now is that the payback period is longer. We will manage.”

In Maharashtra’s Latur district, which suffered four consecutive years of drought and unseasonal hailstorms, demonetisation was dismissed as a passing hurdle that could be tackled.

“Even if there is no money with us, the traders in the market are still taking old notes,” said Rajabhau Pawar, a wealthy sugarcane farmer in a village in Latur. “These are all people who are known to us so even if we give cheques, they accept it, knowing we will not go anywhere.”

But even those who support the ban perceived the finance ministry announcement with indifference.

“We have relationships with wholesale retailers so we were anyway taking seeds only from them,” said Vivek Kumar, the chief executive officer of a farmer producer company in Motihari in Bihar. “We will also get our fertilisers and pesticides like this. The announcement does not affect us.”

Farmers with the company acknowledged that demonetisation had hit vegetable sales, bringing them crashing down by half.

Larger problems

In some areas, the drought has affected farmers, who in response have been forced to scale back sowing activities for the next round of sowing.

“Because there is no rain, rabi will not even start this year,” said Mansukhbhai Mungra, a farmer from Theba village in Gujarat’s Jamnagar district. “There is no point in us even going to buy seeds because the land is too dry to sow.”

No government representative has yet come to survey farms in the entire district for crop damage.

“The government can say all these things [exemptions for demonetisation] and it seems as if they are doing good to the farmers, but what is the point if they don’t even send anyone to survey us for the drought?” Mungra said. “At least they can take care of us in that way.”

It is instead other announcements of the Reserve Bank of India that trouble them, particularly one in which District Central Cooperative Banks – which many people in rural areas depend on – have been forbidden from exchanging old notes.

“The entire rural economy is at a standstill because district cooperative banks cannot exchange notes and so farmers cannot get loans or fertilisers,” Balakrishnan said. “Even most fair price shops in this state are linked to cooperative societies, and if they cannot function, that too will come under question.”

Tamil Nadu has faced 68% rain shortage this year and there is a dry Cauvery delta. All hope is now pegged on rain in December.

Post harvest, it is also wedding season in rural Gujarat. Farmers from Mungra’s village had been spending entire nights camping outside banks to get money for the wedding season. No wedding even in his village costs less than Rs 8 to 10 lakh, he said.

“We are anyway not going to get any crops from rabi, but at least we should be able to hold our weddings,” Mungra said.