Demonetisation promised transformational changes to the functioning of the country’s agricultural sector. It promised elimination of middlemen in the sector and improved access of credit to farmers. A year down the line, these stated objectives are nowhere closer to be fulfilled with the ultimate sufferer being the farmers, evident by fluctuating market prices and the farmer unrest in the state. Farmers who contribute to nearly 14 per cent of India’s total GDP and who have always operated in a market where cash has been the primary mode of transaction are finding it difficult to adjust themselves to these changing times.
“We have always operated in a cash-based economy. This move to push the sector towards cashless or online transactions has caused immense harm to us in the last year. I don’t know how things will pan out in the future but in the last one year the sufferer has been the farmers,” says Keshav Kakad (40), who grows onions in Nashik district.
For the last 15 years, Kakad has been selling his agriculture produce in Pimpalgaon, one of India’s biggest onion markets, and paid in cash. After demonetisation, the government was keen that these payments should be made either through Real Time Gross Settlement (RTGS) or by cheques.
Traders who were hit by a cash crunch immediately after demonetisation had chosen to make most of their payments by cheque. A year down the line, the tradition is being continued.
“I am now paid by cheque by traders. The realisation of this cheque can happen anywhere between 15 and 30 days. If the idea of demonetisation was to help farmers, it seems it has not been successful over the last one year,” says Kakad. He says he does not know of any of his former friends who are paid through RTGS.
Traders, meanwhile, claim while going cashless will help the country in the long run, the proposed system fails to take into consideration the complexities in which agriculture produce marketing committees (APMCs) work.
“Many people believe there are only two players namely farmers and traders involved in a transaction that takes place in an APMC. In reality, it is a far more complex operation with yard traders, packing and transporting agents and commission agents all playing their role in a transaction. Unlike popular perception, not every farmer has the capability of coming to an APMC, so you would have a designated person buying produce from villages and bringing it to the APMC. If you think that we can go digital at so many levels, that is a huge mistake,” says Sachin Khandelwal, a trader from Lasalgaon.
Many activists also believe that while the intent of going cashless may be beneficial, the ancillary support system required for such transactions are not in place. “Going cashless in the agriculture sector is like trying to drive a racing car on a severely potholed road. The intent may be grand but the infrastructure needed to do this is severely lacking,” says agriculture activist Dr Girdhar Patil.
Interestingly, demonetisation is also pinching shopkeepers in villages where APMCs are located.
“Earlier, when there used to be cash transactions, farmers used to come from the market and spend some money in the market to make purchases. This would ensure that some money was circulated into the local economy as well. These days, farmers get their money by cheque and most of the times they think twice before withdrawing money and splurging. Post demonetisation, there has been a reduction in spending at eateries and small shops in the local market,” says Pankaj Baviskar, who runs a shop in Pimpalgaon. Activists also believe farmers are bound to suffer until formal financial institutions are not able to fill in for traditional agricultural capital.