What good monsoon brought, demonetisation snatched away (2016 In Retrospect)
New Delhi, Dec 31 (IANS) A “normal” monsoon brought much-needed relief to farmers after two consecutive years of drought. However, the demonetisation drive during the harvest season has devastated them, with one expert estimating they would need a bailout package of a staggering Rs 3 lakh crore ($44 billion), slightly less than India’s defence budget.
India received 862 mm of rainfall this monsoon, just three percent less than the average of 887.5 mm, spelling good fortune for farmers who had suffered losses and agony in the past few years due to insufficient crop yield.
Barring exceptions in a few states, the average rainfall translated into surplus agricultural produce.
However, farmers’ hopes of earning profits or compensating for the losses they incurred during past drought years were wiped out due to a huge dip in the prices of agriculture produce — a fallout of the tremendous cash cruch that followed the demonetisation of Rs 500 and Rs 1,000 notes.
According to farmers, almost all crops lost their reasonable prices, with tomato growers being the worst hit.
Data issued by the National Horticulture Board showed the average monthly wholesale price of tomatoes went down to Rs 374 per quintal at Pimpalgaon market in December — the lowest in the country — compared to Rs 1,675 per quintal in the same month last year.
In Delhi, the tomato prices in December this year were Rs 653 compared to Rs 1,925 during the same month last year.
Similarly, the average monthly wholesale price of onions plummeted to Rs 540 at Varanasi and Rs 711 at Bhopal, where the lowest price last year was Rs 926.
Noted agricultural policy analyst Devinder Sharma termed the impact of demonetisation more severe than that of the past two droughts combined.
“In last two droughts, farmers suffered a lot, but they were prepared since they could see it coming. After the normal monsoon this year, they had expected profits and improvement in their monetary condition and livelihood. However, demonetisation has caused a 60-70 percent drop in agriculture prices,” Sharma told IANS.
“The fallout of demonetisation has crippled the rural economy. Just imagine the condition of the farmers who have suffered losses when profits were expected after a long time,” he added.
Punjab, Haryana, Kerala, Karnataka and Gujarat are among the states which received deficient rainfall this monsoon. However, it did not have any visible impact in Punjab and Haryana as these states have sound irrigation systems — 98 percent assured irrigation in Punjab and 82 percent in Haryana.
Demonetisation, however, changed the scenario even in these two states. Farmers felt the pinch as their yield did not get reasonable prices after demand plummeted. They claimed that their yield had to be sold below the Minimum Support Price (MSP) and they did not have money to buy seeds for the rabi crop, sowing for which is currently under way.
Narendra Singh, a farmer from Rachedi in Haryana’s Ambala district, said: “Due to lack of enough currency notes during the harvest period, there was a drop in demand from traders. Being the festive and wedding season, we had no option but to sell our yield quite below the MSP.”
What fuelled the slowdown in demand from traders was the traditional cash-based transactions. And the negative impact on the income of the farmers would severely impact their spending power.
Shaam Singh Maan of Karnal district said most farmers in his area did not have enough money to buy seeds for the rabi crop. “My rice yield could fetch just Rs 1,250 per quintal when the MSP was Rs 1,470. Since we are under previous loan burdens, we do not have enough money to buy seeds for the rabi season,” Maan told IANS.
The southern states of Karnataka, Kerala and Tamil Nadu, too, were badly hit due to three consecutive droughts and demonetisation.
Don Bosco, a farmer and social activist from southern Karnataka, said the region witnessed a huge dip in agriculture produce. “Due to short and low rainfall, paddy and ragi output was too low. Farmers were already in distress. Now, demonetisation has added to our woes. We are banking on summer rains now,” he said.
Meanwhile, the government has released rosy data of wheat sowing — a major rabi crop. The figures provided by it show that the area sown under wheat was 27.86 million hectares till end-December, compared to 25.94 million hectares in the same month last year.
And, if one is to believe Union Agriculture Minister Radha Mohan Singh, the sale of seeds and sowing for the rabi crop were not only unaffected but, rather had increased. “As per the data provided by the state governments and agencies, the sale of seeds has increased this year. So is the sowing area,” Singh told reporters.
Experts, however, differed. Analyst Sharma said farmers cannot afford to keep their land barren and sought a relief package for those affected by demonetisation on the lines of drought or flood relief packages.
“The rural economy is totally shattered. The farmers, already suffering from a financial burden due to two consecutive years of drought, don’t have any money. The bureaucrats sitting in Delhi don’t appreciate the plight of farmers. In such a situation only a relief package of Rs 3 lakh crore will help the farmers,” Sharma said.
Concurring, Yudhvir Singh, General Secretary of the Bhartiya Kisan Union (BKU), demanded a loan waiver for farmers to ease their financial burden.
“The government has shown no sympathy for the problems of farmers post-demonetisation. Many farmers have taken loans from private money lenders to buy seeds and fertiliser for the rabi crop. The government should waive off farmers’ loans,” he said.
(This is the last of a series of articles from IANS that looked back at the year that was. can be contacted at email@example.com)