Demonetisation will hit crop loan target, says Tamil Nadu government

The Centre's decision will particularly affect the department's target of crop loan disbursal for the year, which was Rs 6,000 crore.

By: PTI | Chennai | Published:November 16, 2016 4:57 pm
demonetisation, Narendra Modi, central government move, 500-1000 notes invalid, Tamil Nadu government unhappy, crop loan failure, food production failure, Tamil Nadu Food production, unhappy with demonetisation, indian express news Prime Minister Narendra Modi’s decision to demonetise high value currency notes, a step taken to curb black money(File Photo)

Tamil Nadu government said on Wednesday that the Centre’s decision to demonetise old Rs 500 and Rs 1,000 notes would hit its crop loan target for the year and also severely affect the food production. This has also ‘impaired’ the cooperative credit sector that caters to the farming community. Cooperation Minister Sellur K Raju held a review meeting on Wednesday to discuss the scenario, a state government release in Chennai said. It said the RBI notification demonetising the high value notes has affected Primary Agriculture Cooperative Credit Societies and Central Cooperative Banks. While farmers were “unable” to repay their loans on time, the societies were not able to receive new fixed deposits and were therefore ‘completely impaired’, it said, adding, they were also facing difficulties in receiving repayments on crop loans and other credits.

The societies were unable to disburse crop loans at a time when samba paddy crop was underway in Tamil Nadu, it said. The Centre’s decision will particularly affect the department’s target of crop loan disbursal for the year, which was Rs 6,000 crore. As of November 7, 2016, Rs 2,075.41 crore has been disbursed to over 3.38 lakh farmers as against Rs 3,512.80 crore to over 6.38 lakh farmers last year during this time, it said. “A situation has come up wherein the crop loan target for the year (2016-17) cannot be completely met on account of the RBI notification (on demonitisation). Further, Tamil Nadu’s food production will also be severely affected,” it said. A majority of villagers had savings accounts in such credit societies but could not deposit the now defunct Rs 500 and Rs 1000 notes, it said.

The FD receipts of these credit societies stood at a little over Rs 54,000 crore but the demonetisation has resulted in them unable to receive new deposits, “affecting their commercial growth,” besides causing hardships to rural poor. Many services like provision of seeds and receiving premium on crop loans in over 4300 primary cooperative credit
socities were affected even as cash transactions in both these societies as well as Central Cooperative banks (CCBs) were not happening following an RBI notification in this regard, it said. “Because of this, 23 district CCBs and 813 of their branches and lakhs of their customers have been affected.”