In order to study the effect of demonetisation at the ground level and to understand its effect on the villages and rural areas the central government had sent 81 bureaucrats in teams of three to the interior villages of the country earlier this month.
The bureaucrats in their reports have red-flagged loss of livelihood in rural areas, particularly in the non-formal sectors, and highlighted the negative impact on the farm sector in the sowing season.
The basic problem according the report in The Economic Times is not lack of cash in the system but unavailability of the lower denomination notes. Many bureaucrats have suggested that the cash flow of the lower denomination notes should be increased immediately and ask the people in the metros to go cashless as much as they can.
Telangana – Farmers, small traders, vendors worst hit
According to the report, in the state of Telangana the rural economy has been badly hit with extensive loss of livelihood. The agricultural produce is also selling at low cost because of the lack of cash and the wealthy farmers are not bringing produce to the market. Even while the weather is apt for sowing Rabbi Crop the farmers are yet to start the operations. There has been a major decline in the business of small traders and vendors as well.
The power loom industry has also taken a hit. Though there has been a considerable increase in Jan Dhan accounts of the farmers because of the deposits, the second and the third tier workers, who are generally dependent on cash have been worse hit. The team of bureaucrats have recommended that instead of printing Rs 2000 notes, the currency notes of Rs 500 and Rs 100 should be quickly printed distributed to boost liquidity.
Karnataka – Daily wage earners badly hit
In Karnataka, the situation is not as bad but there is a sense of panic for the withdrawal of currency notes from the market. Even here the observations were that the cooperative banks should be treated at par along with the other banks or else the farmers will be adversely affected. In the cities however there are not much problems as there are plenty of ATMs in the city. However, the daily wagers have been badly hit.
Tamil Nadu – Lack of lower denomination notes a worry
In Tamil Nadu, as well the team of bureaucrats have asked to increase the cash flow of lower denomination notes as the daily wages workers are hit because of denomination.