Farmers are calling it a cruel irony. After two, in some areas three, successive drought years and failed harvests, in the 2016 kharif seasons the rains were adequate and crops decent. The farmer looked forward to some money, to repay outstanding loans, prepare properly for the next crop and plan his life a little ahead. Then the government announced demonetization in the first week of November and all the money left the market. This is the time when the kharif harvest, largely paddy, had been threshed and bagged and was ready to be sold, except there were no buyers. The traders in the mandi did not have the money to buy the farmer’s grain because everyone’s money had been declared illegal. The government did not print enough new money so the banks had no money to give traders (or anyone else) to buy the farmer’s grain. What has been particularly hard is that after two bad years, demonetization snatched away the opportunity for a modest recovery.
Harvest time is the best time in the farmer’s life. The results of his efforts come home and this is the time to pay off loans, repair a leaking roof or even build an extra room for the son who will get married. Yes, post-harvest is also the time when marriages take place.
Worse, district cooperative banks where small farmers normally bank had been debarred from exchanging old currency , withdrawing or depositing money. So farmers could not use their accounts. With their accounts frozen, they were unable to make repayments of loans they had taken, even as the interest kept mounting. The government later announced some convoluted steps to attempt to ameliorate the situation but we will need to wait and see what comes of it.
The government’s reasoning was that the cooperative banks did not have systems in place to ‘Know Your Customer’ (KYC) and could hence become conduits for “black money” deposits. But this is not really true. Lakhs of farmers have fulfilled KYC requirements and have been using the government’s Kissan Credit Cards. The unreasonable biased action against district cooperative banks was discrimination at its worst and it dealt a big blow to farmers and to the rural community.
Nearly two months on from the first distress sales of the paddy harvest, reports come in everyday of farmers unable to sell their fruits and vegetables at a semblance of a remunerative price.
In Telengana, tomato farmers failed to sell their produce in the vegetable market in Hyderabad. Some dumped their tomatoes right there because they could not even recover the cost of transporting the tomatoes from their farms to the market.
This was allegedly done because many of these banks do not have systems in place to ‘Know Your Customer’ (KYC). But this was discrimination at its worst and it dealt a big blow to farmers and to the rural community.