In a meeting of the Standing Committee of the Ministry of Finance yesterday, the Union Agriculture Ministry finally admitted that farmers had been drastically affected by Prime Minister Narendra Modi's surprise demonetisation decision in November 2016.
The report submitted by the ministry to the committee acknowledged that demonetisation came at a time when farmers were engaged in either selling their Kharif crops or sowing the Rabi crops. Both these operations needed huge amounts of cash but the government's decision to scrap the Rs 500 and Rs 1,000 banknotes saw nearly 86% of the currency in circulation at that time being invalidated overnight.
Significantly, millions of farmers were unable to purchase seeds and fertilisers ahead of the Rabi season due to this. The smaller farmers in particular, who rely on cash to make purchases, were left stranded as virtually all the cash they had in hand was suddenly illegal tender. Demonetisation also affected big farmers - they had to pay wages to the labourers working on their fields but they, too, found themselves cash-strapped.
On Tuesday, the 31-member committee, headed by Congress MP Veerappa Moily, had been briefed on the impact of demonetisation by three ministries, namely the agriculture ministry, labour ministry and the Ministry of Micro, Small & Medium Enterprises.
The agriculture ministry further stated that due to the shortage of cash, about 1.38 lakh quintals of wheat seeds of the National Seed Corporation could not be sold. Although the government had later allowed the use of the banned notes to purchase wheat seeds, the relaxation did not improve the situation much.
While the Opposition has been crying itself hoarse over farmers' plight post demonetisation for two years now, the ministry's admission comes as a surprise. After all, the Modi government has consistently maintained that the exercise was a necessary and successful step to curb black money and push the country towards digitisation.
The labour ministry's report to the Parliamentary Standing Committee on Finance, however, commended the demonetisation move. According to the ministry, the exercise saw an increase in employment data in the subsequent quarters.
Meanwhile, the Opposition MPs reportedly criticised the note ban and demanded that the government should provide data on the loss of employment in the MSME sector.
Edited by Sushmita Agarwal