Down and out

Published : Dec 07, 2016 12:30 IST

Crowds gather in front of State Bank of Hyderabad in Humnabad, Bidar, which serves 11 villages in the vicinity.

Crowds gather in front of State Bank of Hyderabad in Humnabad, Bidar, which serves 11 villages in the vicinity.


Growing worries

By V. Sridhar in Mandya, Rishikesh Bahadur Desai in Bidar, G.T. Satish in Hassan and Vikhar Ahmed Sayeed in Bengaluru

The farm economy in Karnataka is facing a severe crisis. Agriculture in Mandya district is dominated by small farmers who grow a wide range of crops. They are bearing the brunt of the cash crisis.

The district recorded the most number of farmer suicides in the State last year. For paddy growers, who were already reeling under the impact of a severe drought, and sugarcane growers, wilting under the pressure of delayed payments by sugar mills, this is a crisis they could never have been prepared for.

The outlook for the next sowing season appears grim as cooperatives, the primary source of credit for small and marginal farmers, are in limbo. The cooperative milk procurement and supply system in the State has also been hit hard. Farmers supplying milk to the Mandya District Cooperative Milk Union, affiliated to the Karnataka Milk Federation, the State apex cooperative, have been unable to access their money because the cooperative’s operations have been frozen since demonetisation.

P. Ramakrishnegowda, Chief Executive Officer of the Mandya District Cooperative Central Bank (DCCB), said that between November 9 and 14, the bank collected deposits totalling Rs.95 crore from the public and they were “ in compliance with RBI regulations”. “Suddenly, at about 3 p.m., we got a message from the RBI that we should not collect cash in the banned denominations.” According to banking regulations, the savings of depositors ought to be kept in accounts with nationalised banks. Ramakrishnegowda faced a serious problem because the banks were unwilling to accept cash in Rs.500 and Rs.1,000 denominations. “Sitting on this pile of cash was a major headache for us,” he said. After much pleading with some nationalised banks, he managed to deposit some money in the cooperative’s accounts, but by the end of November he was still saddled with Rs.28 crore in banned currency. The banks, he said, simply did not have the space to keep such large volumes of cash and so asked him to wait until the situation assumed a degree of normalcy.

Ramakrishnegowda said the cash withdrawal limit of Rs.24,000 a week (which applies even to the accounts of primary milk producing cooperatives) “is ridiculously low”. The cooperatives have to pay their members amounts running into a few lakhs on a fortnightly basis depending on the volume of milk procured. Farmers supplying milk have not been paid for almost a month in view of the cash withdrawal limit. Credit for agricultural operations was at a standstill, and “this will have a severe impact on farmers’ ability to purchase inputs or pay wages for farm labour,” he observed.

Cocoon market: Sericulture, which has for long been an avenue of diversification, is also proving disastrous for farmers. Farmers expect a spike in cocoon prices in the winter, the season when the demand for silk peaks, but clearly these are not normal times. Cocoon prices are stagnant in the face of a collapse in the offtake by silk reelers. Reelers complain that merchants of raw silk are staying away from the main cocoon markets.

Siddaraju (28), a silkworm farmer in B.G. Pura village in Mandya district, is distraught. He has brought 35 kilograms of cocoons to the cocoon market at Malavalli, but does not expect any takers unless he is willing to sell them at a discount. “The price ranged between Rs.300 and Rs.370 a kg yesterday but today I expect nothing more than Rs.350 a kg,” he said.

Mukhtar Pasha, a silk reeler who sells raw silk to merchants in Andhra Pradesh, said: “The market has suffered a seizure because the merchants are unable to pay in cash, especially of the legal kind.” A day earlier, he managed to buy cocoons worth Rs.10,000 from farmers making half of the payment in Rs.100 notes and the remaining in Rs.500 notes. But his option of dealing in the now-banned notes is fast disappearing. “I have not even seen the new 500 rupee note, let alone use it in a transaction,” he said. He said the merchants were willing to pay only in the demonetised notes and that he was unwilling to be stuck with tender whose validity had ceased. Pasha said he had five bags (20 kg each) of raw silk valued at Rs.3 lakh for which he was unable to find takers. “If the situation continues, cocoon prices will crash,” he said.

Channaraj, a sericulture farmer, said reelers were transferring the pressure of exchanging old currency to cocoon sellers. “Reelers are paying us in the old currency and are adopting a take-it-or-leave-it attitude.” A superviser at the Malavalli market said trading had “collapsed”. “Only 900 kg of cocoons were auctioned yesterday, whereas, at this time of the year normally about 2,000 kg would be sold,” he said.

Jaggery production: Mandya is a major centre for jaggery production. T. Yashvantha, an activist of the Karnataka Prantha Rytha Sangha, told Frontline that only about 300 of the 450 jaggery units in the district were operating. He pointed out that these small-scale units, which were dependent on migrant labour from Uttar Pradesh and Rajasthan, employed at least 10 workers each. The shutdown is reflected in the collapse in jaggery prices, from about Rs.3,600 a quintal before demonetisation to about Rs.2,950 a quintal now—a drop of 20 per cent. “The high price for sugarcane offered by jaggery units appeared to be a boon for the long-suffering sugarcane growers here, but demonetisation has snatched away that hope,” Yashvantha said.

Jaggery production in the district has come to a grinding halt because the units are unable to either pay wages to workers or cash to farmers. The lone trader at the sprawling jaggery market at Mandya said: “What is the point in running a jaggery unit when nobody has the money, at least in valid notes, to buy in these uncertain times?”

The market for tender coconuts, a speciality of Mandya, has also been hit hard. Traders have an interesting tale to tell. The arrival of tender coconuts at the Agricultural Produce Market Committee (APMC) yard in Maddur near Mandya collapsed from about 3.65 lakh nuts on November 5 to about 1.16 lakh nuts on November 10, after demonetisation. But interestingly, arrivals picked up again, reaching 2.91 lakh nuts on November 19. Why did this happen? Mallesh, a trader at the yard, has the answer. “Traders from outside the State, especially from Mumbai and Pune, were willing to pay a premium for the coconut because they found a way to get rid of the demonetised notes, especially the Rs.1,000 notes.” That is when prices reached Rs.22 a nut, but by the end of November the price fell to Rs.12 a nut. Mallesh said while some farmers were staying away, waiting for prices to recover, small farmers were ready to sell on deferred payment basis because they had no other option.

Villages without banks

Moti Ram Damla has returned to his home in Lal Singh Tanda from the nearby Aurad town in Bidar district after selling two quintals of red gram. Although the market price of 100 kg of soya is Rs.3,000, Damla was forced to sell at Rs.2,200 a quintal as the trader told him to either take the old currency or come back after two months if he wished to sell at Rs.3,000 a quintal.

Narsingh Rao Hatkari, a small farmer in Jamalpur village on the Karnataka-Maharashtra border, is trying to resist the temptation of selling his produce. He lives with his wife, son and daughter in his 100-square foot home. He has grown 12 quintals of soya in his 1.2 hectares of land. In his modest home, the women sleep in the space available between the 24 bags of soya arranged along the wall, while the men sleep outside. Hatkari also rears eight sheep. “I will lose Rs.10,000 if I sell now. I will rather wait,” he said. His land is not irrigated and he is not planning to raise a rabi crop. “We may have to work in someone else’s fields in the next six months,” he said.

Ramrao Gyanoba, a farmer and petty businessman in the village, said he had been hit both ways. “I have not been able to sell my soya and red gram as I did not agree to sell at a lower price. The number of customers to my shop has reduced greatly. I have no cash on hand now. I am waiting to sell whatever is left in my shop and then worry about selling the grain,” he said.

The district has around 11 lakh ha of agricultural land, of which around seven lakh ha is cultivated in two seasons. Bidar, along with Kalaburgi, produced around 40 per cent of the pulses in the State, M. Ziaullah, Joint Director of Agriculture, said.

This kharif season, Bidar had the largest extent of land under soya in Karnataka, nearly 1.45 lakh ha. Jowar, or sorghum, is the staple food here and is cultivated in around 70,000 ha. Red gram is grown on 50,000 ha, and green gram and black gram on around 30,000 ha each. Sugarcane, the lone cash crop of the region, is cultivated in around 25,000 ha. The fields are either full of ready-for-harvest soya or red gram. Farmers are putting off soya harvesting as they have no money to pay labourers. They will resort to barter by giving the labourers 2.5 quintals for every 10 quintals of grain plucked and stocked.

Medium and large farmers seem to have harvested the grain by paying farm hands either in cash or in kind. Some rich farmers, who employ regular labour, have paid them annual wages of around Rs.80,000. Selling the produce at the mandi is not easy. The commission agent is willing to buy the grain only on credit or pay less. Early kharif crops such as green gram and black gram were harvested and sold to the commission agent in October itself. They are yet to reach the retail market. Vendors say there is a chance of their prices going up.

Bidar also has a large grain market. On an average, around 100 trucks carrying at least 10,000 quintals of grain, oilseeds and pulses leave the market every day. But now, only 4,000-5,000 quintals of goods are sold. “That is because there are no buyers and the prices have fallen, albeit slightly. If the money crunch continues for a few more weeks, prices will increase. Apart from affecting trading volumes, it could affect food security, too,” Basavaraj Dhannur, a miller and member of the grain traders’ association, said.

Rajendra Pawar, a farm labourer from a tanda near Ekamba, said he brought home soya and black gram as wages. “We use black gram in our cooking, but not soya. I have to sell it to get some money for daily expenses. But no one is buying soya in the mandi,” he said. Traders are not giving cash, but asking us to wait for one or two months. We cannot afford to do that,” he said.

Vithal Shilke is among hundreds of donkey-rearers in the district whose beasts carry the grain on their backs. The owner is paid about 1.5 kg of soya or red gram for every 40 kg of grain carried by an animal. Shilke makes around Rs.3,000 for every donkey load. “But now farmers have no money, so they are giving us more grain,” he said.

Kalavva Jhareppa, a widow living near Hanumanthwadi, a Dalit hamlet, has only a buffalo to depend on. She earns between Rs.50 and Rs.100 a day, depending on the season and the milk yield. The milk society in Ekamba village, which collects the milk, has not paid her since October 30. “Our payments are usually delayed by weeks. But this time, due to the note ban, farmers have not been paid,” she said. While the secretary of the milk society visits the houses of cattle owners to hand over Rs.24 for every litre of milk supplied, the State government deposits an incentive of Rs.4 a litre in the bank accounts of the dairy farmers every quarter.

M. Nabi Qureshi, president of the Jamat ul–Quresh, or district butchers association, said there was a marked decrease in the demand for goat or chicken meat. “All our transactions are in cash. Now we have no money. It seems like someone has cut our lifeline,” he said.

Penetration of banks is poor in this backward district. Of the 600 villages and 300 wadi-tandas (Scheduled Caste and Scheduled Tribe settlements) in the district, bank branches are located only in 213 settlements. The wadi-tandas are mostly not covered by banks. Satish Kumar Maruti Rao, a lorry driver of Umapur in Basava Kalyan, skipped his work for five days to travel to the nearest bank located 12 kilometres away to exchange the old currency notes and get money to meet his petty expenses. “Everyone from my village left their work to wait at the bank, for they need money to start preparations for the rabi cultivation,” he said.

“The RBI has set a mandate to cover all habitations with a population of 5,000 with at least one bank branch by April 2017. This means that there will be banks only in six villages and not more,” said B.G Shetkar, Bidar chamber of commerce and industries president.

The district is dependent on cooperative institutions. Over 75 per cent of farm loans are issued by the DCCB. Bidar is also recognised as a self-help groups (SHGs) district, with over 22,000 SHGs active in the villages. Women from these groups deposit their savings and take loans from the primary credit societies in 171 villages. The 70 milk societies and the five sugar factories in the district operate through these societies and the DCCB. With the RBI disallowing cooperative institutions from handling the banned currency notes, activities in these institutions have come to a standstill.

Plantation blues Gowribai (60), an illiterate Dalit woman working in a poultry farm at Shantigrama near Hassan, about 180 km from Bengaluru, did not hear about demonetisation until she approached a shopkeeper to purchase a pack of biscuits for her grandchildren. She was waiting for a bus to reach her daughter’s place when the shopkeeper told her that the Rs.500-note she was carrying was not acceptable as legal tender any more. She was shocked and went to all shops seeking change as she was about to board a bus. As nobody was willing to give change for the higher denomination note, she went to her employer, who had paid her wages the previous day. She had not opened a bank account as she never felt the need for one.

Like her, several elderly men and women of Angadihalli, a village consisting of the nomadic Hakki-Pikki and Shillekyata tribes, have never felt the need to open a bank account. “I had Rs.6,000 in old currency notes. As I don’t have a bank account, I gave it to a relative who has an account so that he can deposit it and give me the money later,” said Bandhu (75).

Hakki-Pikkis sell traditional medicines (plant extracts) and offer therapeutic massages. Demonetisation has hit their daily earnings. “People buy medicines worth Rs.150 and offer Rs.500,” said Rahul (36). He earns well, but does not have a bank account. With no earnings, most of the men have returned to the village. “Some of us have deposited whatever cash we had in our bank accounts. We are worried that the deposits may result in our below poverty line cards being confiscated,” said Hooraja, a gram panchayat member.

Dalits and Other Backward Class members form the majority of the farm and plantation labour. The plantation workers are paid Rs.250 and Rs.350 a day, while others earn about Rs.200. With no cash on hand, farmers either delayed the kharif harvest or delayed the rabi cultivation, forcing workers to lose their source of income. Hundreds of farmers have left their maize crop on the field as there are no buyers.

“Earlier this month, a merchant offered Rs.1,450 for a quintal of maize and also paid a small amount as advance. So far he has not turned up to purchase the produce,” said Sanne Gowda, a farmer at Attihalli in Hassan taluk. He has left the crop standing. Unless the harvest is marketed he cannot go in for rabi cultivation. Desperate farmers are willing to sell off their produce even for a lower price. “I am ready to sell maize even for Rs.1,250 a quintal, but I hardly come across merchants ready to offer even that much,” he added. In the case of ginger, the price has come down to Rs.950 a bag (62 kg), which had gone up to Rs.1,300 a few days ago.

Plantation workers have not got the payment for a few weeks as estate owners have not been able to withdraw cash. They get a weekly advance to purchase essentials in the local weekly market and the due as salary at the end of the month. With restrictions on bank withdrawals, estate owners had no cash to make advance payments. They began transferring the advance amount (normally Rs.1,200 a week) to those who had opened Jan Dhan bank accounts.

Anand, who works at Uttolalu Estate, said: “My employer credited Rs.1,200 to my account and my manager informed me about it. I went to the bank at Arehalli in Belur taluk to withdraw cash as I required it for purchases in the weekly market. The bank officials refused to honour my withdrawal form saying that they cannot give me Rs.1,200 as they would have to hand over 12 Rs.100 notes. They asked me to withdraw only when the balance in the account was Rs.2,000.”

If this is the plight of plantation workers, their employers fare no better either. Planters with 10 ha estates require Rs.30,000 to Rs.50,000 each a week to pay the workers. Moreover, during the harvest season they have to spend more as they hire more workers. “Many people from Assam, Odisha and other districts of north Karnataka are working in our plantations. The majority of them do not have bank accounts. We have to pay them in cash, which is impossible given the withdrawal limits. Even if I get cash, it is only in Rs.2,000 notes. The workers have got currency but they cannot use it,” said B.S. Jairam, president of the Karnataka Growers Federation.

Planters, who are already expecting poorer than normal crop this year due to a decrease in rainfall, are worried over the quality of coffee beans. “If the harvest is delayed we will not get the desired quality beans. This will affect planters and workers in coffee estates,” said Jairam. A few planters are managing this situation by withdrawing cash from more than one account in the family. A planter said he withdrew money from accounts of all his family members to pay the workers. “I have to pay an advance to the middleman [agent] who brings workers from north Karnataka to work in the estate during the picking season,” he said.

The banks are making use of this opportunity to recover loans. Kantaraj, a resident of Shettihalli near Hassan, had borrowed Rs.40,000 to set up a chicken stall in the village. The monthly instalment was Rs.2,000. He could not pay the instalment in October as he had to spend all his earnings for the treatment of a family member. He had banned currency notes worth Rs.8,000. He deposited them in his account with Canara Bank in Shettihalli branch. The official deducted Rs.4,000 [including the current month’s instalment] for his loan and credited the rest to his account.

The onion market

Of the various yards at the APMC mandi in Yeshwantpur in north-west Bengaluru, the onion market, which constitutes a separate yard, is the largest. During the peak season, between October and December, one-third of India’s onion trade takes place in this market. Onions from here are sold in places all over India and even exported.

On November 28, only 565 trucks carrying 1.13 lakh sacks of onions arrived at the mandi, down from 1.37 lakh sacks a couple of days earlier (a sack of onion weighs between 50 and 70 kg). “The quantities are falling every day. During this time of the year, we usually have a turnover of more than 210,000 sacks on a daily basis,” said Ravishankar Balakrishna, president of the Potato and Onion Merchants Association, at the yard.

“So far, we have just about managed with cheques, online payments and current account and personal account withdrawals and are selling mainly on credit. We are also forced to trade in old currency and 25 per cent of our transactions are happening in old Rs.500 and Rs.1,000 notes. With supply getting affected on a daily basis, we may have to down our shutters,” he said.

The onion trade, like business in other commodities at the APMC yard, is mainly done in cash and payment to farmers is made instantly. With a severe shortage of valid currency notes, business has shrunk. The number of vendors and buyers who use cheques and other non-cash banking avenues is estimated to be only about 20 per cent.

This year, the best quality onions are sold at Rs.15, compared with Rs.60 last year, during the peak season. While one of the reasons for this was a shortage of onions last year, demonetisation has also resulted in a fall in demand this year leading to a fall in prices. Even the State Agriculture Department has offered a minimum support price of only Rs.6.24 a kg of onions. According to traders, farmers are disposing of their low-quality onions at this price, which are subsequently sold by government agencies for Re.1 or Rs.2 a kg at the APMC market.

“Farmers are suffering as the sale price has fallen much below the support price offered by the government. We take a loan at the start of each cropping season and with the drought this year and now demonetisation, we can expect another spate of suicides in Karnataka,” said Lakshmana C., an onion farmer from Chitradurga who had come to the mandi with 25 sacks of onions.

Abbas, a daily-wage worker who hauls sacks of onions, was standing near an opening in the wall, to buy a plate of rice and dal for Rs.20. Eating his meal, he said he was paid Rs.5 for each sack of onion he hauled. “During the season, which lasts three to four months, there is a lot of work and some of us even make Rs.800 a day, but this time our workload has been coming down every day. Yesterday, I made only Rs.200. Many of the traders insist on paying in old currency and I don’t know what to do as I don’t have a bank account,” he said.

Large retailers purchase onions from the mandi, which has around 500 wholesale traders. They purchase on behalf of hotels or resell the onions to small vendors.

D. Babu, a large retailer from Russell Market in Shivajinagar, who usually buys 300 sacks of onions every day to resell to petty vendors, said his stock, which used to last a day, lasted three days now. “We are forced to use old currency, otherwise our business will stop completely. Take, for instance, a pushcart vendor who makes a few hundred rupees a day and who has very little savings. Demonetisation has destroyed his life.”


Potato disaster

By Venkitesh Ramakrishnan

IN early November, the medium farmer Fateh Singh Bhatti’s days were divided more or less equally between stocking up potatoes that were being harvested from his farms in and around Harnauti village of western Uttar Pradesh and making preparations for his daughter’s wedding scheduled for the first week of December. The harvest, Bhatti told Frontline , was coming up nicely, as were the preparations for the wedding. “My best-quality potatoes were being picked up by the wholesale market at Rs. 2-13 a kilogram and I was looking forward to making a considerable profit by the time the current lot of potatoes moved from my storage to the market. The slump in the production of potatoes in south India, particularly in Karnataka, had raised the demand for north Indian potatoes. Then came the demonetisation announcement, and everything collapsed.”

Frontline met Bhatti on November 27, about three weeks after the announcement. In these three weeks, the price of potatoes fell to Rs.3 to Rs.4 a kilogram. “My crop has become an unmitigated disaster. I will not be able even to recoup my sowing and production expenses, let alone make a profit. Just to break even, I should have got Rs.8 a kg.”

Bhatti gave a day-by-day account of the disaster. “The effect of demonetisation struck on November 9 when market agents and middlemen refused to pick up our load and the truckers refused to accept old notes for transporting charges. My fellow farmers in Harnauti and nearby regions of Sikandrabad and I had thought that this was a temporary affair that would be set right by the government in three to four days. Indeed, that was promised in the television pronouncements. The deal that I had with the rented cold storage was that they would accept and keep my produce until November 30. There is time, I thought, as did many other farmers. So, we held on until November 12 without reducing the price. It also meant that, practically, we were not selling anything. The following week the harsh reality dawned on us—that this was going to be a long-drawn and tortuous affair. The mess in the banks and on the roads brought home that reality to us. We started bargaining frantically and reducing the price day by day. The deadline with the cold storage, which had seemed comfortable just three days ago, started acquiring ominous proportions with each passing hour. There was no hiding our desperation. Day by painful day we brought the price down, to Rs.10, then to Rs.8, Rs.6, Rs.5, Rs.4 and then Rs.3. Each reduction told us that we are doomed for this season. Even then, there is no chance of selling all my produce. The cold storage will throw out our stuff once the contract period is over. Large quantities of potatoes will rot and perish even though potatoes have a longer shelf life than other vegetables like tomatoes.”

Bhatti’s family raises multiple crops on 100 acres (40 hectares) of land every year. He, therefore, hopes to recoup some lost ground. “But there are several farmers across Uttar Pradesh who put all their energy into cultivating one good crop a year. They are doomed this year. These three weeks in the harvesting and sowing season have literally dealt them a crushing blow,” he said. Bhatti is going ahead with his daughter’s wedding with help from friends and family but with a reduced scale of celebrations.

Travelling across four districts of western Uttar Pradesh, Frontline met scores of vegetable and fruit farmers, farmhands, and small-time retailers in villages and small towns. These people grow and sell potatoes, tomatoes, cauliflowers, cabbages, leafy vegetables and sugarcane. In village after village and district after district, farmers complained that the prices of their produce had slumped to roughly one third of what they were before November 8 and that sales had dropped to half of earlier volumes, or even lower.

Rajkumar Kashyap, working in a jaggery kohl (a small village set up for converting sugar cane into jaggery) at Shamli, told Frontline that the kohls normally help sustain the liquidity of the farmer. “Unlike the sugar mills that operate on credit and long-term payments, the kohls have a kind of ready cash system. That, too, has collapsed after demonetisation.” The collapse in liquidity has upset every aspect of day-to-day life in these villages and towns.

Mahesh Chand, a small-time vegetable retailer at Sikandrabad, said his earnings had been halved, although the slump in retail prices had been proportionate to the prices offered to farmers by wholesalers. Chand knows Bhatti and is aware of what the farmer is going through. “My sale price is still at least double of what Bhatti is getting from the wholesaler. But then people do not have money to buy. My sales have come down from around Rs.600 a day to about Rs.300. We are putting up with all this in the hope that poor retailers like me and agricultural labourers who belong to the same category will be prioritised when Modiji decides to give a bonanza to the poor after rounding up all the black money from the rich,” he said. Asked how much he is expecting, Chand said that some supporters of the Prime Minister had told him that there would be cash transfers between Rs.3 lakh and Rs.4 lakh but that he would be happy with even Rs.1 lakh or Rs.50,000.


Stench of paddy

By Akshay Deshmane

FOR someone burdened by a severe cash crunch and indebtedness, Gursev Singh from Malakpur village speaks with an unusual equanimity. “The money given by the arhatiya [commission agents who act as money lenders as well as intermediaries between farmers and buyers] has been paid back by me in instalments, on time. Banks are giving Rs.6,000 a day. I can’t use that money to make payments to the cooperatives and shopkeepers or buy anything in the market because I have a huge loan to repay. Moreover, cash is not received in large sums, so I am sad,” he told Frontline matter-of-factly, having just returned from yet another meeting with his arhatiya inside what is considered to be the Asia’s biggest food grain market, Khanna Mandi, in Punjab’s Ludhiana district.

Not far from where we speak on a chilly late November afternoon, the season’s last batches of paddy are being unloaded from trucks, cleaned and auctioned. There is the stench of paddy husk in the air as farmers, traders, sweepers and drivers are engaged in their respective jobs. Gursev was expecting to receive some money owed to him by the arhatiya but has been told that the government agency which bought his paddy worth Rs.9 lakh has not paid the full sum yet. In addition, there is the uncertainty about receiving cash. “I have to endure the inconvenience of standing every day in a queue outside the local bank. Often the bank runs out of cash when my turn comes,” he said.

Gursev shares this predicament with a large number of farmers in the State, which is known as India’s “grain bowl” and one which, as the Punjab Economic Survey for 2015-16 put it, is “ranked first among States in contribution of wheat and rice to the central pool for the year 2014-15”.

The invalidation of 86 per cent of the currency in circulation posed an added problem for the farmers who were already saddled with indebtedness and delay in payments by government agencies in a season of record paddy production. The severity of the indebtedness problem can be gauged from the fact that it forced the incumbent government—which is preparing for a tough Assembly election—to pass a Bill in late April to tackle the problem of farmer indebtedness. However, it has not been of much help. Amrit Pal Singh, resident of Chahal village in Patiala district, who was visiting the grain market to sell his Basmati paddy, complained that the arhatiya had not paid him his due and it had added to the problem of overseeing a healthy rabi crop, which was sown with great difficulty by taking loans or buying manure, seeds and other materials on credit or “good faith”. “Often we can’t pay by cheque because the sellers worry that we may be indebted and the cheques may not be encashed, so they demand assurances from arhatiyas that we will pay back,” Amrit Pal said.

Experts in the State’s agriculture sector said farmers were the worst affected by demonetisation, not private traders or State agencies who buy the produce or arhatiyas. For, farmers are dependent on liquid money in view of the inadequate penetration of cashless economy infrastructure in rural areas.

S. Ravinder Singh Cheema, vice-chairman of the Punjab State Agricultural Marketing Board, explained: “Only farmers are suffering. Barely 10 per cent of the total value of kharif crops—including paddy worth Rs.25,000 crore, cotton worth Rs.1,000 crore, and other crops, including maize, worth Rs.500 crore—is available in the market in cash. Rural banks dealing with the agricultural market are not getting sufficient cash. There are almost 2,500 such banks in Punjab. Once this volume of cash rotates in the market after farmers get it from the bank, things may improve relatively. The rabi crop market, not the crops themselves, will still be affected though.”

In the fruits and vegetables market, the situation appears to be worse. “Business has reduced by almost 50-60 per cent. But even this much is going on because we are accepting the old Rs.500 and Rs.1,000 notes to prevent the trade from being further hit. But we have asked our members not to accept the notes after December 20. I feel we will know the real impact on our trade by January 10 when the old notes will no longer be valid,” said Amarvir Singh, general secretary of the Ludhiana-based Wholesale Fruit and Vegetable Sellers’ Association. He feels the grape and pomegranate fruit seasons —which begin in early January—will most certainly be hit by the drastic reduction in demand. Early indications of this are coming from the demand for the kinoo fruit, the season for which begins in mid November.

“Just yesterday I was told that if there was order earlier for, say, 10 trucks from Hyderabad for kinoo from Hoshiarpur, Fazilka and a few other districts, it has reduced to two trucks,” he told Frontline . In the vegetable market, prices of coriander, carrot and capsicum have collapsed. Some coriander farmers have not even picked the crop as transportation and other costs are too steep, Amarvir Singh said.

This being Punjab, there is at least official acknowledgment about the plight of farmers. There is so such empathy in the case of migrant agricultural workers. Taravati, who gathers raw paddy spilled on the market floor and gets her daily wages in paddy, said: “Often we are given old notes when we exchange paddy in the mandi. What do we do with them?”


Wholesale crisis

By T.K. Rajalakshmi

There is a saying in the northern parts of agrarian India, including Haryana: “ Kheti aur bimari intezaar nahin karti. Shaadi karne wala phir bhi intezaar kar lega ”, which literally means that while a marriage can be delayed, agriculture and sickness cannot be put on hold. But in the wake of the Central government’s decision to demonetise high-value currency, farmers have been forced to do precisely that—delay sowing of the rabi crop and also put on hold expectations of money for their kharif harvest.

They have neither been able to get money from the sale of their harvested kharif crops nor been able to purchase the requisite inputs like seeds, pesticides and fertilizers owing to the paucity of legal tender.

The cash crunch has hit the agrarian community hard—agriculturists, tenant farmers, small landholders, agricultural labour, all of whom have borne the brunt with an uneasy stoicism. The distress is there for all to see. If the serpentine queues in front of ATMs in the cities and downed shutters of bank branches in Haryana are any indication, the crisis in the countryside can only be imagined.

In Rohtak district, farmers told Frontline that they expected at least a 20-25 per cent reduction in the output of the rabi crop owing to the delay in sowing. They explained that timely sowing was of great importance, especially in canal-irrigated areas where the availability of water is periodical. “The land is cleared and prepared after the kharif crop has been harvested. In some places, it is still being cleared. Then it is levelled and moistened with water, after which the sowing has to start immediately, otherwise the land will harden and become unfit for sowing. The delay matters a lot. We have been unable to purchase seeds and urea from the government cooperative seed societies as they have no written order to sell us the seeds against old notes. The Rs.2,000 note is useless as we cannot make purchases in smaller amounts and no one has the smaller denomination notes to return us the change,” they said. Farmers were forced to buy seeds at huge rates of interest from private outlets, at rates as high as 25 per cent.

“If you want to have an idea of the agricultural crisis post-demonetisation, go and visit a commissioning agent at the wholesale market,” a farmer told Frontline . The wholesale vegetable and grain market in Rohtak district, one of the largest in the State, receives produce from almost 80 villages but is now desolate. Agricultural and horticultural produce from nearby districts like Jhajjar also reach this wholesale market. With harvesting of the kharif crop almost in the last stages and the sowing season of the rabi crop (wheat, mustard and gram) imminent, farmers do not have the luxury of waiting in serpentine queues to deposit old currency or withdraw cash in small instalments. The commission agents were the ones who ensured that the farmer got the price for his produce. Government or private procurement was done through these agents, who purchased the grain from the farmers and sold it at the retail level. The currency crunch post-demonetisation has hit all sections hard. Shamsher Singh, a fodder agent, told Frontline that the government had little clue about the situation in the countryside. “Everything is dealt in cash here. There are no payments even by cheque. Sales of fodder from my outlet have gone down owing to lack of liquidity. Eighty per cent of the farmers here have taken land on lease. They don’t have bank accounts. They do not accumulate enough cash to have bank accounts,” he said.

But there was no respite for anyone, including pensioners, from long queues. Jagjit Singh, a tenant farmer, took his father, a retired army man, to the bank to withdraw the monthly pension. “We could not withdraw it either,” he said, adding that he would rather spend the day working on his patch of land rather than stand in line. “I sold paddy worth Rs.60,000 to the commission agent. He wanted to pay me in old notes. I didn’t take it. He said he would give me the money later. I am managing somehow on debt, but don’t know for how long,” he said. Preet Singh, a local All India Kisan Sabha (AIKS) leader, said that given the degree of informality in social ties among rural folk, farmers and others were able to make purchases of food and other essentials on a “deferred payment” understanding. “The problem is with those who do not ‘know’ anybody well enough. They are in bad shape, and the poorest are the worst sufferers,” he said.

But what has been most shocking is the complete apathy of the government in not allowing farmers to buy the required inputs from government-authorised seed and fertilizer outlets using old currency notes. A sales assistant at the Indian Farmers Fertiliser Cooperative Limited (IFFCO)-run Kisan Sewa Kendra said that he did not have written orders to sell the inputs against old currency. His sales had seen a drastic fall after demonetisation. “Every day this centre used to sell fertilizer and seeds worth Rs.4-5 lakh; it has come down to Rs.10,000 now,” he said. The sales assistant also complained that he was short-staffed. “I have to stand in queues too, to deposit the earnings every day. Earlier, it used to happen in minutes. But now I have to wait for hours. I don’t know what to do. I either queue up or sell fertilizer. I can’t do both,” he said. There are 37 such certified IFFCO-run centres all over the State and none of them was accepting old currency notes from farmers.

Deepak, a young farmer who came to purchase seeds and fertilizer from the IFFCO centre, first enquired whether the old notes would be of any use. He said: “I really don’t know what to do; whether to pay the workers or buy fertilizer.” The sowing period for wheat had roughly coincided with the demonetisation of high-value currency. Owing to the staggered nature of rabi sowing, wheat in some parts of the State could be sown until December 15 and in other parts up to November 30. This was the peak rabi season and farmers have been running around for seed purchases.

A field officer associated with one of the IFFCO centres said that an output reduction of 5-10 per cent per acre (0.4 hectare) could be expected, although individual farmers pegged it higher. The period was also the “loan recovery season”. Farmers who receive money from the sale of the kharif crop usually use it to pay off their loans but now they are not able to. “Acreage is not the issue. The point is the kind of hardship that every segment of the rural population has been put through owing to this drastic measure,” said Inderjit Singh, vice president of the State unit of the AIKS.

With the season of rabi sowing at its peak, farmers are at a loss whether to stand in the queues to deposit their old currency or withdraw money and suffer the loss of a day’s work or more. But every section has been affected by the demonetisation. Contrary to what some economists have suggested about farmers not dealing with high-denomination notes, the reality is vastly different.

Farm and migrant workers hit hard

Farmers are not the only ones suffering. Agricultural workers and migrant labourers Frontline spoke to in the wholesale market were worse off. Jitendra, a labour contractor from Bihar, said that he was unable to pay the workers as the grain commission agents were giving old notes which the workers were reluctant to take. There was also another problem: most of the migrant workers did not have bank accounts. “We are here one day and at some other place the next. We don’t make enough in order to save and put in banks. We don’t even have these smartphones. We have a lot of trouble meeting daily requirements for food and basic necessities,” one of them said. A few among them had bank accounts but complained bitterly that the banks refused to take their deposits and transfer them to their accounts in Bihar. “How are we expected to feed our families in the village? These old notes are useless and the banks won’t accept them,” one of them said.

Ram Dulari, a Dalit with six children, was the only woman among the workers. “My husband is a paralytic. I have no money to buy provisions. It is easy for the rich to manage. What do we do? The provision store owner tells me to buy rations worth Rs.500. If I spend all the money on rations, what will I do if I have to go to the doctor?” she said.

Devendra Kataria, a commission agent, said that he had been able to sell some grain to the retail market but was not able to pay the farmers. “They are not prepared to accept cheques. By the time the cheque gets encashed, the period for sowing will be over. The farmer needs cash immediately. If I want to have a cup of tea, will I pay the tea vendor by Paytm? This is ridiculous. I am not a small farmer, I have 40 acres of land, but even I am unable to buy material for necessities. Plastic money will not work in the wholesale market,” he said. “They want to make an America out of India; they are making it into a present-day Baghdad,” he added.

Fruits were being undersold at the wholesale-cum-retail market. There was one government-managed cold storage facility for the entire market but it closed down recently. “It was useful as it was located right within the market. That option is not there anymore. Some of us are using the private cold storage facility, which is at a distance,” said Joginder Lal, a fruit commissioning agent. “I am not placing any fresh orders with the producer. I will try to dispose off whatever I have now. Sales have gone down considerably,” he added.

The effects of demonetisation are palpable in the countryside but grossly under-reported. In Rohtak city itself, long queues were visible outside ATM kiosks as well as bank branches. Raghubir Singh, a farmer in his 80s, said that this was the first time in his life he was witness to a situation where there was a cap on withdrawing one’s own money. “This is white dacoity in a sense,” he said. The artificially imposed embargo on the purchasing power of the rural consumer is already beginning to have an effect on the overall economy.

A clothes shop owner told Frontline that his sales depended much on the migrant worker, who would purchase items from money earned by working in the harvest season. “They have all gone back home now, empty-handed. At least they wouldn’t starve in the village. Here who will take their old currency?” said Gajendra Jain, a cloth merchant. He said it was unrealistic to think of a cashless economy in a country like India.

For an agrarian community already grappling with low minimum support prices and crop losses due to natural causes like hailstorms and whitefly (a pest) invasions, the demonetisation and the push to a world of cashless transactions could not have come at a worse time.


Tribal tears

By Prafulla Das

WHILE the demonetisation move did not affect some poor families in the backward Kandhamal district in Odisha as they seldom handle cash, especially high-denomination notes, it crippled the economic activities of millions of tribal, Dalit and Other Backward Class people in the State’s tribal areas. The impact of demonetisation was clearly evident in small townships and weekly markets in the form of low level of business activity and slow pace of work at numerous construction sites.

The weekly market at Tumudibandha gram panchayat in the district witnessed little business even after three weeks of the announcement of demonetisation on November 8. There were no queues outside the banks and most of the ATMs had their shutters down as they had no cash to dispense. The rush to banks ended within three days of the announcement.

Meet Bandali Dolemajhi, a tribal woman whose life has turned topsy-turvy in the past three weeks. Her husband earns Rs.200 and she gets Rs.150 as daily wages when they work at construction sites. “From where will poor people like us get Rs.500 and Rs.1,000 notes? We are suffering because of the withdrawal of these currency notes as we are not getting any work, and the contractor who engages us says he will pay our wages at a later date,” said Bandali.

The introduction of the new Rs.2,000 notes was of little use in this region. Kalindri Koslia, a woman who sells used clothes to Bandali, condemned the demonetisation and its faulty implementation. “The release of new Rs.2,000 notes and the non-availability of new Rs.500 notes have affected small traders like me. Of what use is the Rs.2,000 note when our transactions are limited to a few hundred rupees a day?” she said.

Ramamani Nayak, a widow who sells utensils in a permanent shop as well as at the outlet she opens in the weekly haat at Tumudibandha, said with tear-filled eyes: “ I am unable to pay back the wholesaler from whom I procure utensils. She had in her possession Rs.7,000 in Rs.500 denominations when the note ban was announced. She deposited Rs.3,000 in the bank and exchanged Rs.4,000 (eight Rs.500 notes) to keep her business running. The government should have gone after those who have made money through illegal means instead of harassing the public at large.” said Ramamani.

“The government should tackle poverty but not cause inconvenience to poor people like us. We are not getting work or wages since the note ban came into force,” said Rabi Nayak, a resident of the locality. He was of the view that the demonetisation carried little meaning for poor people like him as he had not handled those high-denomination notes in a long time. Nayak, whose last bank transaction took place on June 24, 2015, has a deposit of Rs.289 in his account in the local State Bank of India branch. He opened the account when he was allotted a house under the Indira Awas Yojana in 2009.

While a debate over black money is raging in big cities, the tribal people are concerned more about arranging two square meals a day than about demonetisation.

“The government should tackle the rampant corruption in the administration instead of harassing the public,” said Ramesh Chandra Nayak. “I have not been able to get an Indira Awas Yojana house because I cannot pay Rs.10,000 as bribe. If I had that much money, I would have constructed a house on my own instead of paying a bribe to avail myself of financial assistance from the government to construct a house under the Indira Awas Yojana,” he said.

Nayak, who was working as a volunteer with a non-governmental organisation lost his job a few years ago after foreign aid stopped flowing in and the voluntary organisation started partnering with different government departments, said: “Eighty per cent of the poor people are suffering because of the 20 per cent of the rich people who hoarded money. The government cannot fight corruption by demonetising notes until our elections cease to be a game of money and voters are not bribed.”

“When I came to know of demonetisation initially I was happy that black money holders will land in trouble, but the move ended up affecting the masses,” said Jaleswar Digal, an elderly person of Sindhirigaon village.

In fact, the vast majority of people in interior Odisha have not seen much cash for decades. Many of them do not have bank accounts. Mobile phones are still a distant dream for them. They mostly deal with lower denomination currency notes of Rs.100 or less. Demonetisation has compounded their woes because the smaller denominations they are used to have also disappeared.

Prime Minister Narendra Modi’s campaign for cashless (read digital) transactions cannot work in these remote tribal habitats.

Take for instance the case of Dukhe Mahar, a herder from Ganjupadi village located a few kilometres from the subdivisional town of Baliguda. Dukhe handled the Rs.100 note only once since Rs.500 and Rs.1,000 ceased to be legal tender. He was paid Rs.100 at the Baliguda market when he sold tomatoes that he grows on government land on the outskirts of his hamlet. Dukhe used the amount promptly to repay a loan he had taken from a fellow villager. Dukhe manages to feed his family of seven with the rice he gets for raising and herding cattle belonging to 10 families in the hamlet. Each family gives him two kilograms of rice a week and he buys oil, salt and other small items with the money he gets from selling vegetables. The family is so poor that it is not in the habit of even having tea. Dukhe and his wife Radhika complain that the numerous welfare schemes have not helped improve their economic conditions: they are leading a cashless life and have no ownership rights for the land on which their house is built.

A bank official at Baliguda said many tribal people came to the bank to exchange old high-denomination notes on behalf of traders, contractors and other people who had an excess of the banned notes and so the bank closed the exchange counter after three days. The tribal people are without money as nobody engages them for daily labour. A group of residents of Baimala village in Ganjam district, all belonging to the Kondh tribe who earn a living by making and selling leaf plates and working as daily wage labourers, are aggrieved that they have not been paid for their work in recent weeks.


Seeds of despair

By Sushanta Talukdar

Sixty-year-old Hazarat Ali, a marginal farmer of Dhamdhama area in Assam’s Nalbari district, about 85 kilometres from Guwahati, desperately needed change for the new Rs.2,000 note that a rice trader gave him. He had to buy potato seeds for his four bigha (one hectare equals nearly 7.5 bigha) of land for the rabi season.

He had harvested 60 maund (one maund equals 40 kg in Assam) of paddy and sold six maund of that to the trader. Twenty-two days after the demonetisation announcement, Ali went to the trader again to sell more paddy. The trader offered to pay him in Rs.500 notes, but Ali refused to accept it because the seed seller would not accept it.

“I need Rs.500 to buy 50 kg of potato seeds for the entire plot. However, the seed sellers could not give me change for Rs.2,000 and I managed to buy only 10 kg of potato seeds. I will be able to cultivate only one-fifth of my plot this rabi season,” Ali told Frontline .

Manik Das, 50, of Nij Botahgila village under No. 5 Nij Botahgila panchayat in the district, bought 10 tins of pumpkin and other seeds for Rs.5,000. He paid Rs.1,000 in cash and payment of Rs.4,000 is due. He owns one bigha and has taken 13 bigha on lease. The contract requires him to pay Rs.1,000 a bigha to the landowners a year irrespective of whether he has cultivated it or not. He has harvested about 80 maund of paddy from eight bigha and has grown mustard in six bigha. He plans to sell some paddy and mustard for his cash requirement.

Paddy procurement reduced

Decline in paddy procurement by local rice traders this season indicated the impact of demonetisation on cash-dependent marginal farmers of the district. “Last year we procured 250 to 300 packets [one packet of 45 kg] of paddy on an average daily from the farmers in this area. This time, it has almost halved. We have been able to procure only about 120 to 150 packets a day. Owing to cash shortage, we are unable to procure paddy from all of them. They do not want to accept old currency notes or the new Rs.2,000 note as it becomes difficult for them to use these notes,” said Rubul Ahmed, taking a break from inspection of loading of the paddy procured during the day.

Joydev Baishya of Balitara village, who runs a retail outlet of seeds, fertilizers, cattle feed and yarn, said the demand for seeds had substantially declined even though he had sold seeds and fertilizers worth Rs.2.5 lakh on credit to farmers. He had borrowed money from his father, who retired from service recently, to procure supplies.

The sudden demonetisation has also left Akbar Ali and Aklima Bibi of Sataibari village worrying about the Rs.1.5 lakh taken in loan for the marriage of their daughter Asma Begum on November 20. “There has been cash shortage everywhere and my daily sale has declined from Rs.2,000 a day to just Rs.150,” said Ali, a garment trader.

“The story is common in every household here. The net return is always negative if we take into account the production cost. We never try to calculate as it is very depressing and we just try to make ends meet by selling some quantity of paddy or other crop for buying seeds and household goods. Some people came to the market with Rs.500 notes to buy vegetables for just Rs.20 or Rs.30, but we did not have enough cash in hand to return the change,” said Kiran Deka, 54, who was returning with her husband, Uttam Deka, 60, from the family’s one bigha of land at Nij Botahgila village. Deka’s extended family of nine members harvested 18 maund (7.2 quintals) this season.

Although the minimum support price for paddy notified by the Assam government in 2015-16 is Rs.1,410 (common grade) and Rs.1,450 (Grade-A) a quintal, most of the famers in Nalbari district are selling it for Rs.1,100 a quintal.

According to the Assam Human Development Report (HDR) 2014, Nalbari district has the highest percentage of households (68.8 per cent) without cultivable land in the State and 95.9 per cent households have no irrigated land. The HDR survey data show that 84.3 per cent of the households in Assam are marginal farmers with less than seven bigha of operational holding, 12.3 per cent are small farmers with 7 to 15 bigha. In Nalbari district, 90.9 per cent households have marginal operational holding. The report, compiled by the Guwahati-based think tank Omeo Kumar Das Institute of Social Change and Development (OKDISCD) and the New Delhi-based Institute for Human Development, was published on October 3 this year.

Said Joydeep Baruah, economist and lead author of the HDR: “Demonetisation certainly casts an adverse effect on agriculture in general and petty farmers in particular. Most of the petty farmers depend heavily on cash in hand as the prime source of working capital. Therefore, when cash in hand is reduced, they face a crisis in terms of working capital. It may be noted that the working capital of petty farmers not only includes certain wage components but also a substantial part of their investment in terms of seeds, etc., for the next season. Demonetisation, that too a sudden one, affects petty farmers in three ways. First, now that we are at the peak of the harvesting season, they are facing problems in engaging wage-labour to do the harvesting, and once the crop is lost in the field it will cause irreparable loss to the income of the petty producers. Second, as there has been a general decline in aggregate spending following demonetisation, the crop prices have witnessed a decline, creating a distress selling-like condition. Naturally, this has resulted in a substantial squeeze in the income of petty farmers. This in turn has resulted in the third which relates to a lack of working capital for next season’s investment. This squeeze in the income of petty producers needs to be viewed in a State like Assam along with limited accessibility to formal agricultural credit, including Kisan Credit Cards to petty farmers, and to the absence of crop-insurance coverage. In the absence of such safety nets, demonetisation will put petty farmers in a perilous condition and it will have a far-reaching impact on the economy.” Baruah is also an associate professor of Omeo Kumar Das Institute of Social Change and Development in Guwahati.


Sour note

By Anupama Katakam

IT is the time of year when trucks loaded with harvested sugarcane move steadily on the roads leading to the numerous sugar mills in western Maharashtra. November is the harvest season and sugarcane farmers were looking forward to reaping the benefits of one year of hard work when Prime Minister Narendra Modi announced the demonetisation of high-value currency. When the enormity of the announcement sank in, the farmers found themselves in a situation where they had cash but the District Central Cooperative Bank (DCCB) refused to accept it in view of the restrictions imposed by the Reserve Bank of India. They had no newly issued notes to pay for labour or agricultural material. Like other members of the farming community, sugarcane farmers depend almost entirely on the DCCBs for financial transactions.

As the harvest has just begun, it is not clear what impact demonetisation will have on the macro sugar economy but it is quite apparent that farmers across the board are in a difficult situation mainly because of banking problems. The sowing of rabi crop has begun and it is likely to be seriously affected if cash flow is restricted, several farmers say.

“In the first few days [after demonetisation] we managed to deposit and withdraw cash even though the queues were long. However, when the RBI clamped down on the DCCB’s operations and did not allow the bank to accept the demonetised notes or let us withdraw more than Rs.24,000 a week, that is when our struggle really started,” says Sarjerao Sawant, chairman of the Ajinkyatara Sugar Factory in Satara.

Sugar factories pay sugarcane farmers through the DCCBs every 15 days. Farmers are free to withdraw cash whenever required. It is a well-oiled system and farmers trust it completely. But after the demonetisation decision was announced and restrictions were imposed on the DCCBs, farmers were told that the only solution was to open an account in a nationalised bank to deposit their cash.

“Not many farmers have accounts in nationalised banks because the banking network is poor in these areas. There is just one Bank of Maharashtra branch in this taluk. The DCCBs worked very well for us,” says Sawant. “The government wants to prevent black money from politicians being deposited through helpless farmers and therefore came down on the DCCBs. However, it must be understood that farmers and people in other sectors deal directly in cash on some fronts, so they do keep a significant amount of cash with them. The inability to deposit the money has been a problem for us,” he says.

A manager at a DCCB branch in the district says they tried hard to explain the demonetisation process to the rural folk. “They understand cash and a savings account. We were unable to explain why the DCCB could not take their cash deposits, especially when the media were reporting that Rs.2.5 lakh worth of deposits were permitted. When the Jan Dhan scheme was announced, farmers did not go in for it because the DCCB has always been there for them. Who would have thought this was going to happen?” he said.

Manohar Salunke owns about 4 ha in Nagthane taluk in Satara district. He says that during the harvest season he pays women workers between Rs.140 and Rs.170 a day and men Rs.200 to Rs.250. “We make weekly payments. I have asked the labourers to wait a few more weeks so that I can pay them. They don’t have bank accounts and I do not have cash.”

Salunke says this year’s crop has been reasonably successful owing to sufficient rain and farmers hoped to earn a good income. The mills are paying Rs.2.500 a tonne of sugarcane. Farmers of Satara district have small landholdings, ranging from 0.8 to two hectares. The yield is reasonably high, with each acre producing a minimum of 40 tonnes. On an average, farmers sell between 60 and 80 tonnes of cane, says Saluke. Not all the land is used for sugarcane cultivation; a part of it is kept for cultivating vegetables and ginger, another highly paying cash crop. “Fortunately, for sugarcane farmers, a minimum support price [MSP] on sugar ensures we get a return. So even if the yield is low we earn something.”

“We have a good crop but we are shocked by what the government has done. How do we pay the labour? They also have to survive. People are living on credit and the goodness of the community. But for how long?” asked Sunil Salunke, also from Nagthane taluk.

“They want us to use credit/debit cards and they talk about a cashless economy. Half the time the ATM in our area does not have electricity or is out of order. A proper mechanism should have been put in place before making such a drastic change,” he said. “I agree that farmers should not be exploited and corruption has to end. Many of the farmers have only now learned to go to the bank, forget using an ATM.”

Traditionally, the harvest coincides with the marriage season. Salunke says it costs anywhere between Rs.5 and Rs.10 lakh to conduct a marriage in their village. Those who saved money cannot use it. Many postponed weddings as contractors were not willing to give credit. Many people do not have cheque books. “It is these practical aspects that have turned life upside down,” he said.

Raju Bhave works as a cane cutter and farm labourer. He says he does not have a bank account and waits in the line for hours every day to exchange his old notes. His savings, approximately Rs.25,000, have not yet been fully converted. “The bank refuses to open an account, saying that only after the crisis settles they will help. I don’t have documentation but my employer says he will help.”

Bhave earns about Rs.1,200 a week and is paid every 15 days. “We have not been paid for one month and there is very little money in the house. The cash I have has not yet been exchanged. There is no time as the cutting and sowing season is on. My wife cannot understand all this. We need money for food and the children’s needs.”

Ramchandra Hindutt works at the sugar factory and earns an additional income from dairying. He owns eight buffaloes that produce 20 litres of milk a day. “I earn almost Rs.900 a day from the sale of milk to a dairy. We are usually paid in cash. But I haven’t been paid for a month. I still have to give the milk as the buffaloes can’t stop producing it! The dairy said it will start cheque payments. Let us see how it goes,” he said.

In the farming community, sugarcane farmers are probably more prosperous, according to a young politician from the district. Should there be a crisis, the sugar lobby, comprising big politicians, will back them. “If you look at the larger picture, this community is ready to adopt the digital payment method. Already in urban areas, small retailers who never used swipe machines or payment gateways have begun accepting cards. In due course processes in the village will also change. The mobile phone was a huge revolution in our villages. If we work with that in mind and with better infrastructure, the rural economy will definitely improve,” he said.


Cotton worries

By Swapnil Barai and Anupama Katakam

Votaries of demonetisation may see the Bharatiya Janata Party’s (BJP) victory in the Maharashtra municipal council elections, held just two weeks after the demonetisation announcement was made, as an indicator of people’s acceptance of it, but the fact remains that the rural areas have been hit badly by the cash crunch. Other than the Marathwada region, the BJP swept the elections with 893 of the 3,705 seats spread over 147 municipal councils and nagar panchayats.

Kishore Tiwari, an activist and leader of the advocacy group Vidarbha Jan Andolan Samiti, says the unusual hardships in the rural areas seem not to have dented the BJP’s electoral success. “Farmers believe that the demonetisation move will reduce exploitation. It has been a cash-based economy, but the sentiments are with the BJP, whose members are convincing enough to say that they are on a mission to root out corruption,” said Tiwari. “It is the mismanagement of the Finance Ministry that has angered people, not the demonetisation. It will take time to move towards a cashless economy in these areas especially, but farmers seem to think it will be for the better.”

The BJP won almost every seat in the Vidarbha region, which comprises 11 districts.

Vidarbha, never out of distress

For the past three consecutive years, the cotton-producing region of Vidarbha in north-eastern Maharashtra faced drought. This year, sufficient rainfall ensured a reasonably successful kharif crop, which was sown in July. But farmers’ dreams came a cropper with the demonetisation. Traders are not buying their produce, or buying it at terribly low prices, because of the cash crunch.

The move has also hit rabi sowing. It is critical for farmers to sow by mid November, but they need the capital from the sale of the kharif harvest to buy seeds and fertilizer. Farmers in Vidarbha have been in distress owing to a number of factors, like the vagaries of the weather, massive debts owing to low productivity, allowances given to multinational seed companies, neglect of cotton in the Centre’s policies, and fluctuations in the minimum support price. Suicides of farmers in the region are well documented. Frontline spoke to several farmers and traders in Yavatmal and Amravati districts to find out how they coped with the current crisis.

Most people say the lack of cash crippled daily life. But worse has been the shutdown of the DCCBs following the RBI’s freeze on accepting deposits in the demonetised currency. It was also banned from exchanging the old notes. Most farmers had their accounts only in DCCBs. “They want us to use nationalised banks. But the districts have a very poor network of the big banks and not everyone has an account. This is now taking its toll on everything,” said one of them, echoing the sentiments of most farmers.

“Last week I had to give labourers a payment of nearly Rs.15,000, but I had no money. I was not able to get more than Rs.2,000 from the DCCB. I stood in line daily for eight to 10 days to get money and make the payments,” said Anant Dakhore, a farmer from Akolabazar in Yavatmal. “I ended up paying penalty for the late payment of my son’s school fees. This was the second instalment,” he said. Despite the daily withdrawal limit of Rs.10,000 and a weekly withdrawal limit of Rs.24,000, farmers were able to draw only a fraction of that because cash was not available.

The market day in the taluks is important for farmers who come from across villages to buy and sell agricultural produce, livestock, farm implements, and so on. Ashok Patil, a farmer from Satefal village in Yavatmal, has his only bank account at the Yavatmal DCCB. He transferred money into the State Bank of India account of a friend to withdraw money and pay his workers. “More than half of the farmers in Yavatmal have bank accounts with only the DCCBs. Cooperative banks have always been with farmers, for loan, insurance, relief amount, anything. Nationalised banks check the credit worthiness of borrowers, but the DCCBs have been giving loans to all farmers, including the marginalised ones. I do not understand the larger economics behind this, but there needs to be immediate relaxation in the restrictions put on DCCBs. If they are suspicious of malpractices in cooperatives, let them freeze the accounts of those who indulge in them instead of punishing the small farmers,” said Pravin Deshmukh, president of the APMC.

“This being the harvesting season, the markets were open and we were receiving about 2,500 quintals of produce. It has come down to mere 400-500 quintals. For the first three or four days markets were stopped. When we resumed, there was not enough cash to pay anyone, labourers or farmers. We had to make payments by cheque. Not enough cheque books are available and getting them is a lengthy process,” he said.

Farmers who sell outside the market run the risk of getting lower prices and being cheated with fraudulent weights. Therefore, the farmers are holding on to their produce. Moreover, traders do not have enough money to give the farmers. Market activities have been reduced to a quarter of what they were, according to an observer.

Those who receive cheques are not able to withdraw the amounts immediately. The clearing takes three or four days, but even after that the banks are not able to pay the entire amounts.

“As the banks have not been receiving enough cash, they have a set limit, whereas the demand is high. The traders have made payments to farmers through cheques after this order. Farmers need to make outstanding payments to labourers and need to take care of their household expenses. The rabi season is about to begin. I feel that this decision might harm 15 to 20 per cent of the sowing in Kalamb,” said Dattakumar Darne, president of the Kharedi Vikri Sangh Kalamb. Darne, a social worker and activist from Yavatmal, however, said that people were aware of the difficulties they were facing. An environment has been created where everyone feels that they are contributing to the larger good, he said. The emotional appeal behind the decision has stuck a chord with the people, he said.

But the narratives of farmers paint a different picture. “At first I didn’t think it was an issue. Being a marginal farmer, I do not employ labourers. My family and I work in our farm. I had no money in my bank accounts; neither did I have Rs.500 and Rs.1,000 notes that needed to be exchanged,” said Sunil Ade, a marginal farmer from Metikheda village in Yavatmal. He said the major inconvenience it had caused was the falling prices of the produce. “I needed money this week to take care of household expenses. I took my 25 kg of cotton to a local trader and sold it at Rs.38 a kg, whereas it fetches Rs.47 to 48 a kg in the market.”

Vilas Bhuyar, a farmer with five acres (two hectares) of land in Brahmanwada, Amravati, had difficulty in paying his labourers. This is the peak harvesting season for cotton. He had to convince the labourers to take money later. Bhuvar said the labourers had been cooperative.

Satish Mahalle, a small-time trader in Amravati, has stopped buying agricultural produce from farmers. His entire business used to run on cash. He used to borrow money and purchase cotton and soybean to get small commissions on the sale. Since he cannot pay farmers by cheque as there is no money in his account, he will not be able to do any business this season.

Marathwada, hopes crushed

The situation is not any different in Marathwada. The region comprising seven districts had a good monsoon this year after four years of drought. The soybean crop has been particularly successful and farmers were looking forward to an end to their despair when demonetisation struck.

“The monetary crisis hit us at such a wrong time that once again the region has been plunged into hardship and despair,” said an activist based in Osmanabad.

Marathwada grows a range of crops, with cotton, sugarcane, corn and soybean being the most widespread. “The soybean harvest was very good this year, but traders cannot pay us. In fact, they are taking advantage of the situation by offering much less than the minimum support price,” said Manoj Patil, a trader and farmer in Osmanabad. “We also start sowing by mid November. The timing is very crucial for the rabi crop. Without cash we cannot do anything.”

He said traders were offering something between Rs.2,200 and Rs.2,500 for a quintal of soybean, lower than the rightful price of Rs.2,800. This difference means a lot to the farmer. Owing to lack of cash, they are also getting paid after 15 days, which is leading to more difficulties.

Patil has the same woes as farmers across the country with regard to the cooperative banks. “We don’t have accounts in nationalised banks. Also many of us have taken loans from the DCCBs. If we put in money, it may be used to settle those accounts and I shall not have anything for the next sowing season.” As the region has been suffering from years of drought, the debts are at an all-time high.

Interestingly, Patil says demonetisation is a “good move”. “Watch Modi, he will catch all the looters and black money hoarders. This is a small price to pay for the country,” he said.

Gawalantai Pawar, a micro entrepreneur from Yedshi village in Osmanabad district, takes a more pragmatic view. He says the honest and the poor have nothing to lose. There are inconveniences that we need to deal with. “I see some farmers stranded and not being able to sell their soybean because of lack of money which is the primary medium of exchange. It is a pity that in their effort to curb corruption, the poor and the marginalised have to suffer,” he said.


MGNREGA: No work, no pay

By Ilangovan Rajasekaran

For 50-year-old K. Pachammal, a Dalit agricultural labourer of Melvalai village in Tirukkoilur taluk of Tamil Nadu’s Villupuram district, it has been double whammy: the recall of high-value currency notes came on the heels of a failed south-west monsoon and the north-east monsoon has been deficient. The farmlands in the village, which depends on rain for agriculture, are parched, as is the case in most other parts of drought-hit Tamil Nadu. “No water, no money and no work,” Pachammal said ruefully.

The situation in many villages across the State is tense, with people in panic and despair about an uncertain future. A “cashless” economy is not new for the landless rural Dalit women like Pachammal is not new since they are already familiar with a credit-driven economy—receiving loans during the sowing season and repaying them with interest after harvest.

But this is the first time they have been forced to live in a weird “currency-less” environment.

The demonetisation has also left a deep scar on the rural economy by hitting hard small and marginal farmers, besides agricultural labourers, most of whom are Dalits. The daily wages of Rs.200 for men and Rs.150 for women during normal circumstances were the mainstay of their sustenance, with wages from the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the “100-day work” as Pachammal and others call it, supplementing their income.

But the failure of the rains this year has rendered the lands fallow, offering no work whatsoever to the people. Those who irrigate lands with water from wells are reluctant to employ labourers because of the non-availability of lower denomination notes for payment of wages. Hence, the only earnings for the villagers were the wages from the MNREGS works that have been deposited in their savings accounts in banks, which they are unable to withdraw at present. Nationalised banks in rural areas are facing an acute shortage of lower denomination notes and are in no position to disburse the wages, which amount to Rs.1,600-1,700 per person. “We get six to eight days of work in a month under the MGNREGS,” Pachammal said. It is the public distribution system that has come to their rescue. The State-run fair price shops, to some extent, have mitigated their problems, although the 25 kilograms of free rice per family a month, which is distributed through ration shops, is of inferior quality and inadequate. In addition, these shops distribute “2 kg of sugar, 600 grams of red gram and 2 kg of wheat, besides some quantity of palm oil and a bar of soap,” Pachammal said. “Even two meals a day cannot be met with these rations. Just imagine the plight of those who have a large family,” she added.

Pachammal, however, is better off than many others as she owns a cow, which yields a litre of milk a day. She was supplying milk to a local society and earning about Rs.600 a month. “We would go and collect our money from the bank as and when we needed,” she said.

But this time it is different. Two weeks ago MGNREGS workers, including Pachammal, went to the bank at Kandachipuram, some 10 kilometres away, to collect their money. Pachammal’s savings account had Rs.1,600, which she badly needed, but the bank, which caters to some 20 villages, had run out of cash, especially the lower denominations.

“Since then, and until now, we have been visiting the bank almost daily to draw wages, spending Rs.10 for transport. The bank issues 100 tokens a day to customers who are willing to accept Rs.2,000 notes. The lucky ones, five to 10 of our MGNREGS workers, would get their wages,” she said. By noon, the bank would run out of cash and close for the day. “How can the bank disburse wages in 100s and 500s when it has no supply,” asked K. Sankar, Pachammal’s son and a social activist.

“Like my mother, many women with their children have been waiting in line for hours at banks at Kandachipuram, Tirukkoilur and Mugaiyur, almost every day since demonetisation was announced, to get their wages,” he said. On one occasion, the police had to be called to control the restive workers in Mambalapattu village near Villupuram. “The disenchanted [workers] even staged road blockades and agitations at a few places for not disbursing the wages,” said an activist. Similar incidents are taking place elsewhere in the State.

V. Saradhammal, 45, of Pottapuram village in Omalur taluk of Salem district also has a similar tale of woe. With no rains, women farm workers in Salem district are a distressed lot today. Saradhammal, who belongs to the Vanniyar caste, a Most Backward Class, told Frontline that agricultural work had come to a halt. “For nearly a month, there has been no work for us. Further, the eri [tank] works under the MGNREGS have also been suspended. We are jobless and penniless,” she said while waiting at a bank branch to collect her wages for work done three months earlier.

Women, especially from the Vanniyar and Dalit communities, are the biggest sufferers of the demonetisation exercise. Banks are not able to disburse their wages since lower-denomination notes are not available. “We have been visiting the bank branch every day since the first week of this month. The bank is yet to disburse our wages,” she said. The debt-ridden rural economy is banking on moneylenders for survival. “I have received a loan to meet our expenses. What else can we do?” Saradhammal said.

Unfortunately, the State’s primary agriculture and other cooperative societies and their banks have not extended any credit to these farm workers or to those who have less than an acre in this hour of need as they are “taking care of big landholders, who happen to be its members,” said Shankar. Pachammal pawned her gold earrings weighing three grams for Rs.3,000 recently to get her grandson treated at a private hospital “for fever” and also to meet her family’s contingency expenses.

But she is not alone in the crisis. V. Krishnamurthy (45), a small-time Dalit trader who owns a grocery shop in the nearby Silrampatti village, was also facing similar problems. His shop, which sells groceries and vegetables to the villagers to the tune of Rs.2,000-2,500 a day “during normal times”, wears a deserted look now, with sales having plummeted to Rs.200-400.

“The village has no money,” he said. “The banks have gone dry and the non-disbursal of the MGNREGS wages has further aggravated the problems. I cannot tender exact change for the new Rs.2,000 note, which is in circulation among a few. Since vegetables cannot be stored, I have stopped procuring them,” he said.

In this situation, a few unscrupulous elements are making a killing. Usurious moneylenders from the nearby Tirukkoilur and Villupuram towns are descending on these villages in droves. Many residents have no option but to borrow from the lenders at exorbitant interest rates and also by pawning the gold jewellery despite having money in their bank accounts. Krishnamurthy availed himself of the “opportunity”, as he called it, by getting a loan of Rs.10,000. “The lender gave me Rs.9,000 after deducting Rs.1,000 as the interest advance. I have to pay him Rs 100 every day as interest until I return the sum of Rs.10,000,” he said.

The woes of Krishnamurthy and Pachammal are of pan-Tamil Nadu nature. In addition to a lack of agricultural activity, a drinking water shortage also looms large over villages across the State. “Our agitations and protests in the coming months will be for drinking water too,” said 60-year-old Ganesan, a farmer in Mugaiyur village. “In the last three weeks, no MGNREGS work has been undertaken,” said Ganesan’s wife, who has been a regular worker.

A village panchayat official, however, said that with little or no availability of smaller denominations, wages could not be paid to the workers. “Thus, the supplementary source of income to the Tamil Nadu rural [people] has been shut effectively,” said Villupuram-based social activist C. Nicholas. Even development works, official sources said, had been stopped. The foreseeable future looks bleak for the people of rural Tamil Nadu.

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