India's 263 million farmers mostly live in the cash economy. (File photo by AFP)
New Delhi:
With unceasing reports about the despair of rural areas which are strapped for cash, the government is launching an emergency plan to help farmers and villages in the next ten days.
More currency is being dispatched as farmers complain that they have been left without any way to buy seeds and fertilizer at a time when they should be sowing the winter crop. In parliament, opposition parties have decried the government for its poor timing in cancelling high-denomination notes and say that a move intended to punish the corrupt rich is squeezing the poor instead.
Today, the government announced that old 500-rupee notes can be used to buy seeds. Last week, farmers were allowed to withdraw upto 25,000 rupees a week against their crop loans.
The old 500 and 1,000-rupee notes were pulled from circulation just as thousands of farmers were recovering after two years of drought. Punjab and Uttar Pradesh, which will both vote soon, have large farmer populations.
India's 263 million farmers mostly live in the cash economy, exposing them to the full impact of Prime Minister Narendra Modi's shock announcement that larger denomination bank notes would immediately cease to be legal tender. The ban in one stroke wiped out 86 percent of the money in circulation. Delays in printing new 500 and 2,000 rupee notes and a shortage of them has meant money has been tight.
While people in cities are still queuing up to exchange or deposit old money at the bank, and to draw new funds, many villagers live miles from the nearest branch and have yet to see the new notes being rushed into circulation.
Delays to the planting season that began last month could dent agricultural and overall economic growth, wiping out gains for farmers who this year cashed in on decent monsoon rains after being hit by drought in 2014 and 2015.
Farmers who have already spent money on ploughing and irrigation to keep the soil moist can ill afford to leave their land fallow. Late sowing typically reduces yields and increases the risk that inclement spring weather could damage crops.
"Most farmers have already availed of their farm loan for the previous summer season and, for the handful who can still withdraw, the ceiling is too low," said Tejinder Narang, a New-Delhi-based farm expert to news agency Reuters.
The breakdown in the cash economy is causing major disruptions to the supply of produce and goods to cities. Trucks are stranded with no money for fuel, workers won't load goods for free, and distributors can't pay up.
In the year to March 2017, the cash crunch is estimated to pull down India's gross domestic product (GDP) growth from last year's 7.6 per cent by as much as 4.1 percentage points, according to news agency Reuters. The government has reportedly assessed that growth could contract in the October-December quarter and is planning a major investment push to correct that.
More currency is being dispatched as farmers complain that they have been left without any way to buy seeds and fertilizer at a time when they should be sowing the winter crop. In parliament, opposition parties have decried the government for its poor timing in cancelling high-denomination notes and say that a move intended to punish the corrupt rich is squeezing the poor instead.
Today, the government announced that old 500-rupee notes can be used to buy seeds. Last week, farmers were allowed to withdraw upto 25,000 rupees a week against their crop loans.
The old 500 and 1,000-rupee notes were pulled from circulation just as thousands of farmers were recovering after two years of drought. Punjab and Uttar Pradesh, which will both vote soon, have large farmer populations.
India's 263 million farmers mostly live in the cash economy, exposing them to the full impact of Prime Minister Narendra Modi's shock announcement that larger denomination bank notes would immediately cease to be legal tender. The ban in one stroke wiped out 86 percent of the money in circulation. Delays in printing new 500 and 2,000 rupee notes and a shortage of them has meant money has been tight.
While people in cities are still queuing up to exchange or deposit old money at the bank, and to draw new funds, many villagers live miles from the nearest branch and have yet to see the new notes being rushed into circulation.
Delays to the planting season that began last month could dent agricultural and overall economic growth, wiping out gains for farmers who this year cashed in on decent monsoon rains after being hit by drought in 2014 and 2015.
Farmers who have already spent money on ploughing and irrigation to keep the soil moist can ill afford to leave their land fallow. Late sowing typically reduces yields and increases the risk that inclement spring weather could damage crops.
"Most farmers have already availed of their farm loan for the previous summer season and, for the handful who can still withdraw, the ceiling is too low," said Tejinder Narang, a New-Delhi-based farm expert to news agency Reuters.
The breakdown in the cash economy is causing major disruptions to the supply of produce and goods to cities. Trucks are stranded with no money for fuel, workers won't load goods for free, and distributors can't pay up.
In the year to March 2017, the cash crunch is estimated to pull down India's gross domestic product (GDP) growth from last year's 7.6 per cent by as much as 4.1 percentage points, according to news agency Reuters. The government has reportedly assessed that growth could contract in the October-December quarter and is planning a major investment push to correct that.
Track Latest News Live on NDTV.com and get news updates from India and around the world
