Days after allowing farmers to make cash withdrawals up to Rs 25,000 per week against sanctioned crop loans, the Centre on Monday announced that they will now be allowed to use old high denomination notes for purchasing seeds. Farmers can now use old Rs 500 notes at state-owned outlets towards the purchase of seeds, the Finance Ministry said in a statement.
Farmers can purchase seeds from the centres, units or outlets belonging to the central or state governments, public sector undertakings, national or state seeds corporations, central or state agricultural universities and the Indian Council of Agricultural Research (ICAR), on production of proof of identity, the finance ministry said in a statement. The government is committed to ensure that farmers are suitably facilitated during the Rabi season, it said.
Besides, the government has also extended the deadline for payment of crop insurance premium by 15 days and permitted APMC-registered traders to withdraw up to Rs 50,000 per week.
With the onset of winter, farmers were gearing for the Rabi season. However, Prime Minister Narendra Modi’s November 8 announcement has taken a toll on rural population as the agriculture sector is entirely cash-dependent. Cash crunch meant that farmers had no money to pay farm hands, threatening production of key commodities. With food rations dwindling and no takers for old Rs 500 and Rs 1000 notes, daily-wage earners also struggled to make ends meet.
West Bengal Chief Minsiter Mamata Banerjee, who is trying to stitch up a rainbow coalition against demonetisation, asked the Centre to come up with a proper plan of action instead of "announcing new changes” everyday. "The lower middle class, traders, daily wagers, housewives are the worst sufferers,” she said.
The Modi government's current bid to demonetise higher denomination notes to crackdown on black money has severely hit the rural economy. With many villagers yet to be connected to the formal banking system, and the trouble being faced in the last mile, delivery of new currency notes has left rural India scrambling for cash. A large number of agrarians who do have accounts, bank with the local co-operative and Gramin banks, which in compliance with RBI guidelines were not authorised to exchange or deposit the defunct notes.
Add to this the fact that almost all transactions in rural India are cash based and only a fraction of Indians use "plastic money" for day to day paltry payments. The move hit daily-waged farm labourers even more, as cash-starved farmers are unable to pay wages on time in the right currency.