FOR Tamil Nadu farmers, demonetisation of Rs.500 and Rs.1,000 notes could not have come at a more terrible time. The water level in dams across the State is fast heading towards dead storage, and farmers in the Cauvery delta and other districts are unable to cultivate both the kuruvai (short term) and samba (medium and long term) crops this year. Faced with the “the worst agrarian crisis in the past 55 years”, it is not surprising that farmers look at the demonetisation as “a direct assault” on them.
The situation is so grim that six farmers committed suicide or died of heart attack in the past few weeks on seeing their paddy or turmeric crops wither away for want of water. Given this, what has angered farmers the most is that cooperative banks and cooperative credit societies in villages have become inoperative consequent upon the demonetisation. These banks and credit societies are not transacting any business in cash on a directive from the Reserve Bank of India (RBI) after the Narendra Modi government announced the demonetisation on November 8.
From November 9, in the wake of the RBI instructions, district central cooperative banks and primary agricultural cooperative credit societies in Tamil Nadu, which are the backbone of the rural economy, have refused to exchange Rs.500 and Rs.1,000 notes from farmers. Farmers have not been allowed to withdraw money from their savings bank accounts in these banks and credit societies. Ration shops in villages do not accept Rs.500 or Rs.1,000 notes either. With no ATMs in villages and nationalised banks having their branches mostly in the towns, farmers across Tamil Nadu do not have money even to buy groceries. They do not have cash to buy fertilizers, repair pump sets, pay farm labourers or undertake weeding operations where groundwater is available and the samba crop has been sown. That the long-term samba crop, raised between August and December/January, has withered away for want of water is another story. Worse, there has been no cultivation of kuruvai, which is done from June to September, for the past five years.
To add insult to injury, District Collectors have told farmers that they will have to pay the premium for their crop insurance in cooperative banks or primary cooperative credit societies before the November 30 deadline. Farmers have been warned that if they fail to do so, they will become ineligible to receive compensation for their failed crops. On top of all this is the currency famine.
A normally unflappable Ranganathan, secretary, Cauvery Delta Farmers’ Welfare Association, reacted sharply. He said: “Weeding operations are under way for the directly sown paddy in the Cauvery delta districts of Thanjavur, Tiruvarur and Nagapattinam. This involves considerable number of women labourers whose daily wages have to be paid in cash. After the demonetisation was announced, agricultural operations have come to a standstill. We are not able to withdraw more than Rs.10,000 a week from our savings bank accounts. But a farmer with a medium-sized holding of up to 10 acres needs at least five to eight times that amount to pay for weeding and other operations. The demonetisation has completely jeopardised these operations. Farmers are at a loss as to how to pay the wages and get the work done. Considering the entire gamut of the problems we are facing in the Cauvery delta region, 2016-17 appears to be the worst season in the last 65 years.”
The sluice gates of Mettur dam, which irrigates the Cauvery delta districts, were opened only on September 20 (they are opened on June 12 in a year of normal rainfall). Water from Kallanai, situated on the border between Tiruchi and Thanjavur districts, was released only from September 24. Water released by Karnataka, after interventions from the Supreme Court, was only enough to water the samba crop in the delta region a few times.
An assault on farmers
P.R. Pandian, who owns cultivable land near Irulneeki village, about 15 kilometres from Mannargudi in Tiruvarur district and who is the president of the Mannargudi branch of the Tamil Nadu All Farmers’ Associations’ Committee, called the demonetisation “a direct assault on farmers”. It had led to “total stoppage of life in the delta districts”, he said.
“A late north-east monsoon will only spoil the [directly sown] samba crop,” he said. “Given this background, the demonetisation has led to a situation where we are unable to exchange the Rs.500 and Rs.1,000 notes for valid notes from the district central cooperative banks. We are also not able to withdraw money from our accounts there. These banks do not accept cheques from us. There are no ATMs in villages either,” he added. Middle-class people, farmers and the common man were, therefore, standing in queues for hours together in front of nationalised banks to exchange their notes. People in rural areas are not in the habit of stocking up groceries and now they have no money to buy even groceries. “Thus, demonetisation has hit the livelihood of farmers hard,” Pandian said.
G.S. Dhanapathy, a farmer from Bharathipuram, Andakulam village, Pudukkottai district, said there was neither an ATM nor a nationalised bank in a stretch of 50 km around Bharathipuram covering about 200 villages. “People in these villages are unable to exchange Rs.500 notes. We are not able to withdraw money from the cooperative banks in order to buy urea for our crops. The cooperative credit societies also do not accept Rs.500 notes from us. No cash transaction is being done in these banks and credit societies. So agricultural operations have been affected,” said Dhanapathy, who is also the Pudukkottai district chairman of the Farmers’ Forum of India. Shops selling fertilizers or groceries do not accept Rs.500 or Rs.1,000 notes from farmers. Farmers are unable to sell their cattle because potential buyers insisted on giving only demonetised notes, he added.
Dhanapathy said, “We are unable to pay farm workers. They haven’t got their wages. The new Rs.500 and Rs.1,000 notes are not available here. In petrol bunks, they accept Rs.500 notes. But if we buy petrol or diesel for Rs.200 or Rs.300, they write out the balance on a slip of paper and ask us to come after some days to get the money. Demonetisation is a good scheme but people are running from pillar to post to rustle up some valid money. They are undergoing indescribable hardships,” he added.
“We are not able to do any work and agriculture has been hit hard” was the refrain of R. Manickam, a farmer in P.K. Agaram in Lalgudi taluk, Tiruchi district. “We do not receive loans from the cooperative credit societies and we cannot exchange our Rs.500 or Rs.1,000 notes for Rs.100 or Rs.50 or Rs.20 notes. Cooperative banks were open but they were not working. Fertilizers couldn’t be bought. We are unable to pay mechanics to fix our pump sets. We are unable to maintain our tractors,” he said.
Since the rains had totally failed this year, the cotton crop, which had grown to a height of about a foot and a half, has started wilting. The onion crop, which is dependent on rains, has started withering. “So we cannot recover the money we have invested in agriculture this year. If farmers stand in the queue for days on end to exchange Rs.500 or Rs.1000 notes or to withdraw cash [from nationalised banks], how can they cultivate their fields or pay wages to farm labourers?” Manickam asked.
Government’s statement
On November 16, the AIADMK government issued a statement acknowledging that the cooperative credit societies, which functioned at the level of villages, had become inoperative because they were not able to receive any cash. They could not disburse loans to farmers or collect dues because Rs.500 and Rs.1,000 notes could not be deposited in them unlike in the case of nationalised banks. The services of 23 cooperative banks and their 813 branches, which served several lakhs of people, had been hit hard, the statement said.
Demonetisation had led to a situation where farmers were unable to pay their crop loans on time. Credit societies were unable to disburse crop loans, which would affect food production. The statement, which was issued after Sellur K. Raju, Minister for Cooperation, presided over a meeting in the Secretariat, said the RBI’s directive had made these societies and cooperative banks inoperative. In the financial year 2015-16, as many as 6,38,643 farmers received crop loans totalling Rs.3,152 crore. However, crop loans amounting to only Rs.2,075 crore had been distributed to farmers as on November 7, 2016, although the target for the financial year 2016-17 was Rs.6,000 crore. Supply of fertilizers and seeds from all the 4,474 primary agricultural cooperative credit societies had been affected. All this would severely affect food production in Tamil Nadu, the statement predicted.
The only person to strike a different note was Cauvery V. Dhanabalan, a farmer in Odhiyathur in Nagapattinam district. “There is no impact” of demonetisation, he said, because rains had again failed this year and both the kuruvai and samba crops were lost.
“This year we have lost the samba crop in a major way. In the last 35 years, I have never seen agriculture being affected in such a big way,” Dhanabalan said. Since the crops had failed and farmers had no money, there was no impact of demonetisation on them at all, he argued.
