Never before has a Prime Minister’s address to the nation had such a catastrophic impact on the lives of the masses as Narendra Modi’s November 8, 2016 speech. At the stroke of the midnight hour, as the world slept, currency notes of the denominations Rs.500 and Rs.1,000 ceased to be legal tender.
On the fateful day, the Kisan Sangharsh Jatha had reached the drought-prone Anantapur district in Andhra Pradesh, the hotbed of suicide by farmers. The next morning at the local market we found farmers had come from nearby regions with vegetables and flowers but they had no buyers. People were queueing up in front of banks and ATMs, totally unprepared for how the quixotic decision would unfold. Elsewhere, farmers from Kolar in Karnataka reported that marigold flowers were not fetching even Rs.100 for a 50 kg bag. Farmers were forced to dump their produce as the amounts quoted would not even meet their transport expenses. This was the scenario all through the route of the jatha from then on until November 24, when it reached Delhi.
Money woes As we entered Telangana on November 11, 2016, just two days after the Prime Minister’s address, the first death by demonetisation was reported. A woman in Mahbubabad district, Kandukuri Vinoda (55), who had sold her agricultural land to meet the medical expenses of her paralysed husband and the marriage expenses of her daughter, had committed suicide a day before. She had got Rs.56.40 lakh after selling the 12 acres (one acre is 0.4 hectare) of land they owned. The desperate act was apparently prompted by the fear that the money would now be rendered as good as paper since depositing anything above Rs.2.5 lakh would invite action for possession of black money. On November 13, 2016, we got the information of the next suicide, from Gudibande taluk in Chikkaballapur district of Karnataka. Eshwaramma (40), an agricultural worker, had lost Rs.15,000 while trying to deposit it in the bank. Distraught at losing her hard-earned savings, she committed suicide. The scenes in the markets in Nalgonda, Suryapet, Khammam and Jagtial were heart-rending, with farmers being forced to dump perishable crops like vegetables and flowers.
On November 14, 2016, as the jatha traversed through Telangana and reached Nirmal, the new district carved out of Adilabad district, it found a long queue before a Andhra Bank branch. The majority of those standing in it were women. Bhoomamma and Lakshmi had been coming daily for a week, they said, to convert the money they had received in payment for their paddy crop. They mentioned that they had sold crops worth Rs.28,000 and Rs.42,000, respectively, and had got paid in notes of Rs.500 and Rs.1,000. They had not been able to convert the amount into legal tender despite waiting from dawn to dusk for several days. The story was no different that day as they left dejected after bank officials said they had no more cash. Ashanna, a farmer, found the courage to speak on camera about his plight at a time when any voice against Modi’s “surgical strike” on black money was blasphemy. He narrated how his efforts to convert the Rs.50,000 he had got from selling paddy had been futile for yet another day. They all said that the “note ban” had disrupted their daily life and stalled agricultural activities. It had led to the destruction of the vegetables they had grown as there were no buyers, and they were unable to buy essential commodities and agricultural inputs. In the rare instances where there were buyers, farmers reported that the traders were paying far less for the crops than they were worth. Undoubtedly, Modi had gifted a bitter harvest for these and countless other hapless peasants.
No work, no wage Agricultural workers had not got work or wages since the Prime Minister’s address. People were unable to purchase essential commodities, vegetables and medicines; small shopkeepers found no buyers; and the poor were unable to even travel because of the non-availability of cash. Institutional credit was not accessible to the vast majority of poor peasants, tenant farmers and agricultural workers, most of whom were from socially oppressed sections. They depend on cash borrowings, the possibilities for which were now frozen. The peasantry, which was reeling under an acute crisis, was further pushed into distress by the demonetisation decision. They have suffered severe income losses and yield losses as a consequence. Sowing was delayed, and there was a decline in the area sown with wheat and other crops.
Agriculture remains the main source of livelihood for people in the countryside. After demonetisation, the ready availability of cash for investment in agricultural activity and to meet household expenses was disrupted abruptly. It came in the harvest season, which led to further distress for farmers who were already in a deep crisis.
In addition, the massive retrenchment in the unorganised sector, coupled with the lack of employment opportunities, forced a reverse migration from cities to villages. Thousands of cash-strapped people, who until then made regular remittances to their families, now returned to their villages as it was impossible to survive in cities. Naturally, this added to the rural distress, while the large reserve army of unemployed people looked for employment under the Mahatma Gandhi National Rural Employment Guarantee Act. Cuts in allocations to the MGNREGA ensured that it was a futile search.
Mere opening of Jan Dhan accounts clearly has not made access to credit easier, and the rural populace still carries out transactions mostly in hard cash. We found farmers who wanted to sell their produce but traders were not prepared to buy because they did not have cash. Farmers seeking to sell their produce in “rythu bazaars” were unable to find buyers. The problem was particularly acute for farmers seeking to sell perishable goods like vegetables, fruits and flowers and for the fishing community seeking to sell its catch. The inability to exchange notes for food and other daily expenses also led to problems.
Cooperatives under attack One of the most debilitating impacts was the systematic attack on the rural cooperative banking sector. The Reserve Bank of India (RBI) said through a notification that district central cooperative banks could not allow their customers to exchange demonetised notes or even to deposit such notes. The pretext for the move was that cooperative banks did not follow KYC norms for their customers. According to a report, 33 state cooperative banks and 367 district cooperative banks catered to the needs of over 12 crore customers. A large number of them were farmers who had received loans against their Kisan Credit Cards and were now unable to pay back their loans. Notably, only in Kerala, which is known for an effective cooperative banking sector catering largely to the needs of farmers and the rural poor, cooperative banks were left with over Rs.1.25 lakh crore frozen. Farmers’ cooperatives also suffered irreparable damage because of demonetisation.
Long, winding queues were witnessed outside banks and ATMs in Andhra Pradesh, Telangana, Maharashtra, Madhya Pradesh, Uttar Pradesh and Haryana. The jatha started witnessing more people at the meetings even in places like Nagpur, known to be a Sangh Parivar stronghold. In Bhind we had the first protest march to a State Bank of India (SBI) branch, on November 17, with people harassed by the decision and exhausted by the long queues participating far beyond our mobilisation capacity. This clearly indicated that something had gone seriously wrong for the rural masses. Spontaneous protests broke out as the jatha reached Morena, with news also coming in of yet another woman committing suicide in the district as she could not buy medicines with the banned notes. The number of deaths caused by demonetisation only increased even as the state showed total apathy and was in denial mode.
The insensitivity to the plight of the peasantry and the poor can be understood when one notes the fact that the Prime Minister’s Budget-like speech was high on theatrics and rhetoric but had nothing tangible for them. He claimed that there was a 6 per cent increase in rabi sowing and a 9 per cent increase in fertilizer usage on the basis of questionable data. Delayed wheat sowing and reduction in the acreage of wheat were a direct result of demonetisation. He deliberately concealed the fact that the previous two years were drought-hit. Better monsoons and increased sowing of pulses were the reasons for the increase in acreage and fertilizer use and these were no indicator of support for demonetisation. He merely announced 60 days’ interest waiver for farm loans taken from district cooperative banks and societies for rabi farming. Notably, this was a period when the government decision had irreparably damaged cooperatives and their disbursal of farm loans was minimal. The announcement that three crore Kisan Credit Cards would be converted to RuPay debit cards was a scheme that was in existence after 2012 and millions of cards had already been issued by 2013-14. Yet another announcement about NABARD being given Rs.41,000 crore for provision of low-interest credit to cooperative banks also had been routinely happening from much earlier. In 2015-16, NABARD sanctioned credit limits aggregating Rs.71,497 crore under a short-term refinance portfolio and Rs.48,064 crore in long-term refinancing.
Collapse of prices and livelihoods The All Indian Kisan Sabha (AIKS) team that visited Mandsaur in Madhya Pradesh after the killing of six people in police firing earlier this year found a situation of acute distress in the region as prices of most crops had crashed to about 60 per cent below last year’s prices. Demonetisation had led to this crash, aggravated by faulty policies such as the import of wheat and pulses in a year of good harvest. Soyabean, which fetched Rs.5,000-6,000 a quintal last year is getting only Rs.2,200-2,400. Chana, which fetched up to Rs.9,000-10,000 a quintal, is getting only Rs.4,000 a quintal. Both these crops reported a 60 per cent fall in prices since last year. Similarly, the best quality wheat was fetching only Rs.1,200 a quintal, way below the MSP (minimum support price) of Rs.1,625. Last year it ranged between Rs.1,900 a quintal to Rs.2,000 a quintal; so there was a decline of over 40 per cent. Moreover, the government purchased at the MSP for only three months and not throughout the year. The import of wheat at zero import duty added to the farmers’woes. Garlic prices fell from Rs.13,000 a quintal to Rs.1,000 a quintal, a drastic 92 per cent fall; methi (fenugreek) prices fell from Rs.9,000-Rs.10,000 a quintal to between Rs.2,200 a quintal and Rs.3,000 a quintal, a drop of about 70 per cent. After demonetisation, traders are paying 2 per cent less for cash transactions. In this period, input costs increased manifold. Undoubtedly, the crash in prices has had a cascading effect on indebtedness, which is the main cause of farm suicides.
The charade of MSP The incessant fall in prices and the lack of government procurement or purchasing centres renders the MSPs as notional figures unable to boost the confidence of the peasantry. This was one of the main reasons for the protest in Maharashtra, Madhya Pradesh and Rajasthan, which snowballed into a massive movement with farmers’ organisations exhibiting unprecedented unity. In all the three States, the Bharatiya Janata Party (BJP) governments were forced to agree to intervene in procurement, open purchasing centres, and buy at MSP. However, in Rajasthan, while purchasing centres were opened in all districts for moong (green gram) and groundnut, a restriction that only 25 quintals of groundnut would be procured at MSP from a farmer led to further protests and the limit was raised to 50 quintals. The struggle is on.
After the death of six farmers in Madhya Pradesh, Shivraj Singh Chouhan’s BJP government was forced to address the issue of falling prices. However, instead of promising public procurement at MSP, it offered the Bhavantar Bhugtan Yojana (Price Deficit Finance Scheme) which literally meant that the government would pay the difference in price if a crop was sold below the MSP. It claimed that more than a quarter of the total 64 lakh farmers in the State had registered themselves under the scheme and the expenditure likely to be incurred by the government was over Rs.4,000 crore for the ongoing kharif crop. Other than soyabean, kharif crops like pulses, groundnut and maize were also eligible under the scheme. After the Price Deficit Finance Scheme, big traders are reportedly bidding as low as Rs.1,500-Rs.2000 a quintal, which was below the earlier bidding price of Rs.2,800-Rs.2,900 a quintal. Before demonetisation, farmers got between Rs.5,000- Rs.6,000 a quintal. The MSP announced for 2017-18 was only Rs.2,850 a quintal plus a bonus of Rs.200 a quintal. This resulted in protests at the Agar Malwa Mandi in the State and a police lathi-charge on October 30, 2017.
Potato farmers In Bihar, Jharkhand, Uttar Pradesh and West Bengal, potato farmers have been witnessing historically low prices. The price potatoes fetched in Bihar last season was only Rs.300 a quintal, which does not meet even the rent for cold storage, ranging from Rs.400 to Rs.450 a quintal. Before demonetisation, potatoes fetched Rs.500 a quintal, according to farmers in the State. They pointed out that the owners of cold storages deliberately hiked storage prices so that farmers would be forced to sell at low prices. Notably, a retailer sells potatoes grown in Bihar at Rs.10 a kg, while the Uttar Pradesh variety is priced at Rs.30 a kg.
In West Bengal, a 60-kg bag of potatoes fetched Rs.400, that is, Rs.666 a quintal. Post-demonetisation, the prices fell to Rs.200-Rs.250 a bag, or merely Rs.416 a quintal at the most. In the fertile basin of the Damodar river, a farmer can produce about 60 quintals on a bigha (about one-third of an acre) of land. The loss in prices will be in the range of Rs.15,000 a bigha. Over 50 per cent of potatoes are still in cold storage, and if the situation continues, at least 20 per cent will still remain in cold storage in December. Farmers will be left with no option but to abandon the crop as they will not be able to recover even the carrying cost. In Uttar Pradesh, too, reports suggest that 30 per cent of the old crop is still unsold, although planting for the next season is nearing completion. Farmers claim that before demonetisation potatoes were selling in the State at Rs.1,000-Rs.1,400 a quintal, whereas prices have now fallen to Rs.350-Rs.450 a quintal depending on the variety and quality. Prices have not recovered in any of the States.
In Bihar, arhar/tur dal (red gram) at present fetches farmers merely Rs.2,800-Rs.3,500 a quintal, whereas before demonetisation it fetched Rs.9,000-Rs.9,500. Earlier, farmers in the State grew green gram so that it could be sold for money that would be invested in the next paddy season. However, this time, the price fell drastically from Rs.7,000-Rs. 9,000 a quintal to merely Rs.2,600-2,800. The usual trend of rising prices a few months after the harvest season has been reversed. Now prices rise progressively as the harvest season is left behind, according to farmers. Arhar/tur farmers in Kalaburagi, Karnataka also reported that they were getting far below even the MSP of Rs.5,050 a quintal after demonestisation with prices falling to Rs.4,200-Rs.4,700 and then to as low as Rs.3,800-Rs.4,000. In the case of wheat and pulses, the ill-timed decision to import from other countries ensured that the prices continued to fall.
Chilli farmers In Andhra Pradesh, chilli was cultivated in about 4.65 lakh acres in 2016-17 compared with 3.9 lakh acres the year before, and production shot up to about 93 lakh quintals compared with around 80 lakh quintals the year before. In Telangana, the production was around 40 lakh quintals. The BJP-led Central government’s much-hyped Market Intervention Scheme (MIS) for Fair Average Quality (FAQ) variety was applicable only to 8.83 lakh quintals in Andhra Pradesh and 3.37 lakh quintals in Telangana. The Union government’s decision ensured the purchase of less than 10 per cent of the total produce under the MIS and at a price lower than what farmers are already getting for FAQ variety. The price announced was only Rs.5,000 a quintal while the going rate was already around Rs.7,000; farmers will be able to recover their investment only if a minimum of Rs.10,000 a quintal is assured. The cost of production itself ranges from around Rs.7,500 a quintal to Rs.10,000 a quintal. The handling/transportation charges of Rs.1,250 also do not meet the actual expenses. The Telugu Desam Party government’s promise of an additional Rs.1,500 a quintal for up to 20 quintals also falls short of expectations. It has to be noted that the sale price of export quality Teja variety of chilli had crossed Rs.13,000 a quintal last year. The price of chilli-334 plummeted to Rs.1,500 a quintal, while the cost of production is as high as Rs.10,000 a quintal. Given that it was a drought year and irrigation costs escalated while productivity fell from around 25 quintals an acre to below 15 quintals an acre, the prices of Rs.3,000 a quintal plus the Rs.1,500 a quintal bonus will not even meet 50 per cent of the costs of cultivation. The bonus price announced by the State has also not been passed on to farmers by traders, who are underpricing, leading to heaps of chilli bags remaining dumped at the Guntur Mirchi Yard, Asia’s biggest chilli market. Clearly, the depressed prices for farmers meant enhanced profits for big traders and corporate companies. This is the pattern that is unfolding increasingly across all crops post-demonetisation.
The M.S. Swaminathan Commission recommends effective intervention to ensure remunerative prices of at least 50 per cent above the cost of production, crop insurance for all farmers, interest-free loans, and the distribution of free seeds and subsidised inputs in advance. Instead of implementing these recommendations, the BJP government resorted to flawed import policies, made a mockery of the people’s plight, failed to ensure effective crop insurance, and performed dismally in procurement and price stabilisation. This scenario led to heart-rending scenes of farmers leaving vegetables to rot on their fields in parts of Karnataka, while flowers, tomatoes and milk were dumped on the streets. Goods and Services Tax (GST) has added to the peasantry’s woes.
The rising wave of protests post-demonetisation and the unprecedented unity of the peasantry against the BJP government’s apathy to their plight and against the neoliberal economic policies had forced governments in Maharashtra, Rajasthan, Madhya Pradesh, Punjab and elsewhere to bow to their demands. The anniversary of demonetisation will witness massive protests. The trade unions have called for a Mahapadav on November 9, 10 and 11 and over 184 organisations of the peasantry and the rural poor have come together for a massive protest from November 20 onwards. If demonetisation was the beginning of an onslaught on the poor, it is now evident that the battle has been well and truly joined by the victims of the extraordinarily callous misadventure.
Vijoo Krishnan is joint secretary of the All India Kisan Sabha.
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