The Costs of Demonetisation: Upset Farmers; Traders’ Pain to Continue

A daily round-up of the human costs of demonetisation.

A pineapple a day does not keep demonetisation away. Credit: Ajoy Ashirwad Mahaprashasta

A pineapple a day does not keep demonetisation away. Credit: Ajoy Ashirwad Mahaprashasta

Upset farmers

Despite abundant rainfall and a recharged underground water table, farmers in the Karimnagar district of Telangana were unable to take up cultivation. The cash crunch forced a number of farmers not sow this season. Farmers had expected a surge in productivity, but could not take sow their crops because of not being able to pay the daily-wage labourers. According to statistics available with the agriculture department, cultivation was carried out on 8,902 hectares of land against the normal area of cultivation of 54,827 hectares in the district, The Hindu reported.

The drop in prices due to demonetisation has severely affected farmers. The Hindu reported on the effect on the pineapple farmers in Kozhikode. Prices had fallen from Rs 27 in November to Rs 20 in December. Falling prices have lowered profits, which subsequently affected the labour that was hired for the season. Most of the labourers who had come states like Odisha, West Bengal and Jharkhand have been sent back. Baby Jon, who works as a a pineapple farmer said, “I cannot pay their wages in liquid cash now – So, I have reduced my workforce from 250 to 180.”

In a unique move, farmers from various districts of Chattisgarh gave away 1,000 kg vegetables for free. Meant as a method of protest, the farmers wanted to draw the government’s attention to the drop in prices as a result of demonetisation. The drastic effect on prices has affected farmers who were looking to increase profits after a season of high productivity. Dharmesh Kumar Tank, a farmer from Rajnandgaon district and a member of the farmers’ union, told Indian Express, “This year, the price a farmer is getting for his produce is abysmally low. For vegetables it is between Rs 25 and 40 a crate, which contains 27-28 kg of produce. The price does not even cover the farmer’s transport costs.”

Cooperative banks cash strapped

According to The Quint, cooperative banks are still struggling for cash even the December 30 deadline has passed. Demonetisation and the subsequent implementation of policies has been uneven in cooperative banks, directly affecting farmers and the sowing season. Ashok Tiwari, manager of the Gaziyabad District Cooperative Bank of Mamura said, ” We didn’t get any money even 10-15 days after the announcement of demonetisation. We never faced such cash crunch in past. Due to the efforts of higher officers and the headquarters, we got some money. We wanted to give money to the farmers and customers but if was very difficult.”

Hotels bracing for lower occupancy

Hotel companies are preparing for reduced demand in the next few months. Travel and even corporate bookings are taking a hit as leisure plans are being diverted owing to the cash crunch. This will possibly affect hiring practices too. According to Business Standard, companies are cutting back on expenses and looking into better employee management practices. Rattan Keswani, deputy managing director of Lemon Tree Hotels said, “After the announcement leisure hotels booking pace has dropped and in hotels dependent on large banquets there have been postponements or drop in numbers. Travel for business seems to be slowing down due to drop in economic activity.”

Traders’ pain to continue

Traders, retailers and various other trading bodies have voiced their concerns over the impact of demonetisation, especially on small traders. Small traders and retailers, who largely deal in cash have been struggling with business, as they have witnessed a drop in sales. According to Assocham, at least 60% of the workforce in this sector has been laid off, while demonetisation will also lead to deflation and a slowing down of the economy, as the pain is set to linger for three economic quarters, Business Standard reported.

  • Narender Nagarwal

    The situation of daily wage labourers in Darjeeling tea estates deeply upsetting. Since the demonetisation, the worker have not been paid their dues since November 2016. There is no arrangement to ease out their financial crisis, as at presently just few ATMs are functional.