New Delhi: Two years after demonetisation, the Union agriculture ministry has admitted that the farmers were badly hit by the note ban. Demonetisation had made 86 per cent of existing currency (in denominations of Rs 500 and Rs 1,000) illegal tender. The farmers, particularly the smaller ones, depend on cash for the purchase of seeds and fertilisers.
The Narendra Modi government has maintained that demonetisation was a necessary step to curb black money and a successful exercise. It has defended demonetistion in the face of criticism by the Opposition who said that the farmers and smaller business entities were the worst affected.
Now, the Union agriculture ministry has admitted in a report that the note ban badly affected the farmers. In a meeting of the Standing Committee of the Ministry of Finance, the Ministry of Agriculture acknowledged that due to the lack of cash, millions of farmers were unable to purchase seeds and fertilisers ahead of the rabi season.
The agriculture ministry informed the committee that when demonetisation was implemented, the farmers were either selling their kharif yield or sowing rabi crops. Demonetisation rendered all the cash they had in hand useless. This drastically affected the farmers, said the agriculture ministry report, which discusses the effects of demonetisation.
Even government seeds could not be sold, the report said further. Demonetisation also affected big farmers as they had to pay wages to the labourers working on their fields. But they went cash-strapped after demonetisation, the agriculture ministry report said.
The ministry said that due to the shortage of cash, about 1.38 lakh quintals of wheat seeds of the national seed corporation were not sold.
The government had later allowed the use of old notes of Rs 1,000 and Rs 500 for the purchase of wheat seeds. But this relaxation did not improve the situation much.
However, the labour ministry, in its report to the committee, commended the demonetisation saying that the move saw an increase in employment data in the subsequent quarters.
In the standing committee meeting, the Opposition MPs criticised demonetisation and demanded that the government should provide data on the loss of employment in the micro, small and medium enterprises. The committee has 31 members including Congress stalwarts Veerappa Moily and Manmohan Singh.