Free Press Journal

What good monsoon brought, notebandi snatched away

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New Delhi : A “normal” monsoon brought much-needed relief to farmers after two consecutive years of drought.

  However, the demonetisation drive during the harvest season has devastated them, with one expert estimating they would need a bailout package of a staggering Rs 3 lakh crore ($44 billion), slightly less than India’s defence budget. India received 862 mm of rainfall this monsoon, just three percent less than the average of 887.5 mm, spelling good fortune for farmers who had suffered losses and agony in the past few years due to insufficient crop yield.

Barring exceptions in a few states, the average rainfall translated into surplus agricultural produce.


However, farmers’ hopes of earning profits or compensating for the losses they incurred during past drought years were wiped out due to a huge dip in the prices of agriculture produce — a fallout of the tremendous cash crunch that followed the demonetisation of Rs 500 and Rs 1,000 notes.

According to farmers, almost all crops lost their reasonable prices, with tomato growers being the worst hit.

Data issued by the National Horticulture Board showed the average monthly wholesale price of tomatoes went down to Rs 374 per quintal at Pimpalgaon market in December — the lowest in the country — compared to Rs 1,675 per quintal in the same month last year.

In Delhi, the tomato prices in December this year were Rs 653 compared to Rs 1,925 during the same month last year.

Similarly, the average monthly wholesale price of onions plummeted to Rs 540 at Varanasi and Rs 711 at Bhopal, where the lowest price last year was Rs 926.

Noted agricultural policy analyst Devinder Sharma termed the impact of demonetisation more severe than that of the past two droughts combined.

“In last two droughts, farmers suffered a lot, but they were prepared since they could see it coming. After the normal monsoon this year, they had expected profits and improvement in their monetary condition and livelihood. However, demonetisation has caused a 60-70 percent drop in agriculture prices,” Sharma told IANS.

“The fallout of demonetisation has crippled the rural economy. Just imagine the condition of the farmers who have suffered losses when profits were expected after a long time,” he added.

Punjab, Haryana, Kerala, Karnataka and Gujarat are among the states which received deficient rainfall this monsoon. However, it did not have any visible impact in Punjab and Haryana as these states have sound irrigation systems — 98 percent assured irrigation in Punjab and 82 percent in Haryana.

Demonetisation, however, changed the scenario even in these two states. Farmers felt the pinch as their yield did not get reasonable prices after demand plummeted. They claimed that their yield had to be sold below the Minimum Support Price (MSP) and they did not have money to buy seeds for the rabi crop, sowing for which is currently under way.

Narendra Singh, a farmer from Rachedi in Haryana’s Ambala district, said: “Due to lack of enough currency notes during the harvest period, there was a drop in demand from traders. Being the festive and wedding season, we had no option but to sell our yield quite below the MSP.”

What fuelled the slowdown in demand from traders was the traditional cash-based transactions. And the negative impact on the income of the farmers would severely impact their spending power.

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