Effect of demonetisation on agriculture sector

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Our agriculture system is fully based on cash money because the labourers are depend on direct cash money. As we know money is important for everyone. The government allow farmer to buy seeds using old notes, but this is not enough. Transactions in India directly depend on cash money. The ban of rupees 500 and 1000 notes adversely affect on the agriculture sector. Due to lack of cash, most farmers have insufficient cash to purchase seeds, fertilizers and pesticides. These all are primary needs to sow the seeds. Due to lack of cash money the farmers has limited ability to purchase seeds and fertilizers.

Farmers purchase seeds and fertilizers from private traders on credit. The lack of cash money has limited the ability of farmers to purchase seeds and other inputs on time and at reasonable price. The farmers have borrowed money from moneylenders at high interest rate. The demonetisation has affected the agricultural supply chains and also hit the income of agricultural households.

In the month of November the kharif harvests arrive in the mandis. And the cash crunch has prevented the smooth sale of harvest by farmers. So farmers are forced to sell their crop at a lower price than market price. At many places farmers could not sell their crop due to cash crunch. And in some regions traders have not picked up farmers crop from fields. And in some regions farmers sell their crop in exchange of the demonetised currency of Rs.500 and Rs.1,000.

Cash is the primary mode of transactions in agriculture sector. In many states Punjab, Uttar Pradesh, Odisha, Maharashtra, Gujarat and Kerala have cooperative banks. These cooperative banks have been barred from exchange and deposit of demonetised currency. Sale, transport, marketing and distribution of produce to wholesale centres or mandis, is totally depend on  cash. Most of the labourers have not yet bank accounts. They didn’t exchange and deposit the old currency of Rs.500 and Rs.1000 notes.

Effect of demonetisation on agriculture sector

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