For the otherwise busy Azadpur Mandi, one of the biggest wholesale fruit and vegetables markets, it is a winter of discontent. Unsold stocks are piling up, fresh stocks are delayed and traders are busy negotiating with farmers, urging them to wait for another week for payment for their farm produce. Most traders here do not have bank accounts or exposure to online transactions. They deal in cash. So, when their Rs 500 and Rs 1,000 notes suddenly ceased to be legal tender, their business virtually shut down.
The Azadpur Mandi (wholesale market) supplies more than 15,000 tonnes of fruits and vegetables to Delhi, the National Capital Region and adjoining cities. Traders at the Mandi claim that their transactions had plummeted by nearly 70 per cent and they believe that their business will be hit in the short term.
“It is wrong to assume that every cash transaction is black money. The entire Mandi business works on cash. The government should have taken the problems faced by farmers into acount, the timing could have been slightly better,” says Hardev Singh, a trader from Ghaziabad. He is vehement that the extent of loss would be significant, especially for small farmers, during the ongoing crop season.
According to vegetable vendor, Naresh Sehrawat of Narela (part of Delhi), who has come with his baskets of cauliflower and radish, traders were not buying vegetables because of the cash constraint. But Naresh is not alone. Many farmers bringing their produce from adjoining Sonepat and Panipat and parts of Uttar Pradesh, have stopped coming to Azadpur Mandi since November 14.
Javed Ansari, who runs a fruit shop in Amroha, Uttar Pradesh and visits Azadpur Mandi almost daily says, “I cannot stand in a queue for eight hours to get money and then go to market. I am a small trader who transacts daily, but in cash.”
Mohini Mohan Mishra, senior executive committee member of Bharatiya Kishan Sangh, backs the government’s move. “Yes, calibration of the move could have been better as it is sowing time. Farmers cannot leave the sowing to queue up for money,” he admits.
At the Grain Mandi in Narela, Ramphal, a farmer from Sonepat in Haryana, has come to sell Basmati rice, but there are no buyers. The commission agents have nothing but old currency notes. “I have to sell it at any cost to get money for my new crop. We may get the seeds, fertilisers and pesticides from commission agents on credit, but we have to give it back on time and as very little time is left for us we do not have much of a choice,” says Ramphal.
While small traders are angry as their daily earnings have fallen from Rs 2,000 to as little as Rs 200 or Rs 300, there is support for demonetisation among bigger traders who believe it will reduce inflation. Gulzar Lone, a wholesaler of Kashmiri apples, says “It will bring more transparency and will reduce black money.”
Ajay Vir Jakhar, chairman of Bharat Krishak Samaj, has requested the government to step in to support farmers tide over the immediate crisis. “Demonetisation worries require immediate attention. Restrictions on exchanging and accepting old currency notes imposed on district cooperative banks must be removed immediately,” he had pleaded and his plea has been heard. The government has allowed farmers to purchase seeds and fertilisers from all state and Central government operated outlets.
According to Devender Sharma, Trade and Food Policy analyst, the impact of demonetisation is worse in remote areas where the number of ATMs are less and a farmer has to sometimes travel ten to 15 kilometres to access a working ATM. Many farmers, therefore, are resorting to distress sales to be able to rake in cash. “Only six per cent farmers in India get the benefit of MSP. What is not being realised is the distress sale that much of the remaining 94 per cent farmers have to resort to, and that too year after year,” says Sharma.
Many economists believe that the impact on the food and agriculture sector will stabilise in a few days. Ashok Gulati, former chairman of the Commission for Agriculture Costs and Prices (CACP) and chair professor at ICRIER, says that the impact of demonetisation was not as severe as had been projected and that it was evident from the fact that supplies of essential commodities had not dried up and their prices too had been fairly stable over the last ten days. “In rural India many systems work on credit hence, there is not likely to be a big impact of demonetisation,” says Gulati.
Meanwhile, the government is taking measures to minimise the adverse impact of the ban on currency notes of some denominations on the farmers. Agriculture minister Radha Mohan Singh assures that the impact of demonetisation was not as big as had been propagated by the Opposition and assures that the situation would improve soon. “There were initial inconvenience, but we are taking various measures. Farmers are being allowed to take Rs 25,000 cash from banks. As supply of currency increases, the situation will improve over the next 50 days. This will not impact Rabi crop planting which will carry on till December in the country. We are also going to make arrangements in the Mandi so that business becomes normal,” the minister says.
The government has also extended the time limit for farmers to pay crop insurance premiums by 15 days and promised more relief for farmers in future. Opinion varies on the extent to which the hapless farmer has been hit by demonetisation of some currency notes. The real impact the measure will have on the agro-economy, will of course, only be evident in the coming two quarters.
anuradha@businessworld.in
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