India: Demonetisation last nail in the coffin of already beleaguered peasantry

Asia Human Rights
November 21, 2016
Reproduced with Permission
Asian Human Rights Commission

Even if one puts the cacophonous debate on the merits and demerits of demonetisation of Rupees 500 and 1000 currency notes aside, one thing is clear: it has hit hard the farmers all set to sow Rabi crops. Almost entirely dependent upon cash transactions for everything, starting from buying seeds and fertilisers, the farmers found their notes turn to trash overnight with the demonetisation move. Many of them have nothing else to "bank" upon and for no fault of theirs. The World Bank-Gallup Global Findex Survey 2014 had put the number of people with a formal bank account in India at a paltry 53% in 2014, and that too after a Pradhan Mantri Jan Dhan Yojna (PMJDY) push; it was at 33% the year before.

Further, though the PMJDY did increase the number of accounts opened, it did not actually mean usage of the same for transactions as studies after studies found out. The failure of the scheme is evident from the fact that the banks had to take recourse to deposit Re. 1 in scores of these accounts. This was just to bring the numbers of Zero Balance accounts, a mammoth 76% of the all PMJDY accounts opened by September 2014, as they showed how the scheme had failed on the ground! Ironically, most of the accounts really active in the rural areas have been rendered useless as they are in district cooperative banks debarred by the Reserve Bank of India from accepting or exchanging old notes!

It is in this context that the recent request by the Union Agriculture Minister of India to the finance ministry, to allow farmers to use them for buying seeds makes perfect sense. It also betrays the fact that the move has been disastrous for already beleaguered peasantry and may as well end up as the proverbial last nail in the coffin for farmers in India.

The request makes even more sense because farmers of India have been reeling under a relentless agrarian crisis even before the demonetisation move. Years of successive droughts having broken their backbones, the extent of damage caused by drought across India even this year is hidden to none. The crisis has been severe enough, to put provincial governments and the union government at war with each other for credit for relief work, at times going to the absurdity of rushing Water Trains without a drop of water to the affected areas.

The drought has been severe enough to claim thousands of lives. Maharashtra government, for instance, admitted that 2,053 farmers killed themselves between 1 January 2016 and 30 June 2016, as against the total of 3,228 suicides it admitted had taken place in 2015. And, this year the crisis is hitting farmers worst in Maharashtra, Bundelkhand, and even affecting Telangana, and engulfing newer areas like Karnataka. The state of Karanataka has already seen 457 farm suicides since April this year!

What makes no sense, however, is the Finance Ministry's outright rejection of the demand of the Union Agriculture Minister, by arguing that this may become a conduit to offload black money. Had the implications not been near catastrophic for farmers, one could have laughed at this lame excuse.

To begin with, the Union Minister of Agriculture had made the request with ample security measures in place, collecting photocopies of identity documents and other details for the selling agencies, such as National Seed Corporation, Indian Council of Agricultural Research or state agriculture departments for instance. He had also proposed to allow no refund of money or return of seeds purchased through old currency notes. Further, the same finance ministry has allowed the use of old notes for various essential services, including buying movie tickets in Maharashtra!

Evidently, the Finance Ministry has not merely erred gravely in denying the demand of a cabinet member; it has also exposed farmers to even more distress. The decision does not augur well for anyone, neither the farmers, nor the country as it could bring a spurt to farmer suicides already at an exceptional high this year.

The Finance Ministry should immediately reconsider its decision and allow the use of old notes for buying seeds, i.e. unless the Ministry is okay with the farm crisis claiming many more lives, in which case the blood of the farmers will be on the Ministry's hands.