Demonitisation in India: Farmers' Groups write an open letter to the Prime Minister
by La Via Campesina
DEMONITISATION IN INDIA: FARMERS' GROUPS WRITE AN OPEN LETTER TO THE
PRIME MINISTER [1]
[2]Several farmers' groups in India have written a joint letter to the
Prime Minister of India, highlighting the severe distress that exists in
the countryside after the Indian Government withdrew nearly 86% of the
currency in circulation overnight, in a supposed crackdown on corruption
and 'black economy'.
Three months since the decision to partially demonitise all bills worth
1000 INR and replace all bills worth 500 INR, the move has been widely
criticised by economists of all leanings as chaotic and unwarranted.
India is a predominantly cash-based economy. The government's drive to
turn India into a cashless society,one where digital banking and plastic
transactions would become the norm, has taken much of the rural society
by surprise where digital infrastructure necessary to facilitate such a
transition is barely existent.
While mobile phone usage in India is impressively common, number of
smartphone users are only a fraction of that number. More so, much of
the rural population are out of the formal banking system due to lack of
adequate infrastructure in the forms of bank branches and ATMs. The
crackdown, announced abruptly on 8 November 2016, was intended to catch
currency hoarders by surprise and thereby obliterate the black economy.
The government had estimated that nearly 20% of the total cash in
circulation were hoarded as 'black money' and this surprise step would
effectively force the hoarders to either destroy those cash or come
clean. At the time of publishing this article, reports indicate that
nearly 97% of the cash currency have returned to the banks, effectively
raising doubts about the claims that '20% of currency were being hoarded
as cash'. Critics say that most of those who involve in money laundering
and tax evasion have parked their assets in tax havens or in real estate
properties and that this crackdown would do nothing to retrieve that
back.
Effectively, the rural agricultural economy which is heavily dependent
on cash is in tatters. The English version of the open letter,
reproduced below, gives a sneak peak into the distress that has dawned
upon Indian farmers and farm workers, who were already reeling under
back-to-back droughts and price crash on their produce due to cheap
imports and agricultural dumping brought about by free trade agreements.
Bharatiya Kisan Union, a member of La Via Campesina is also a signatory
to the letter.
-------------------------
DATE: 5 JAN 2017
DEAR PRIME MINISTER,
Namaste! The signatories to this open letter to you represent lakhs of
farmers of this country across various states and regions. We have been
deeply distressed at the hardships that rural India in general, and
farmers including agricultural workers have been going through from the
time that you brought in demonetization of 86% of India's currency on
November 8th 2016, in the name of curbing black money in our economy.
Right from the beginning, it was clear that our rural and agrarian
contexts/economies were not kept in mind and measures not taken
specifically for these vulnerable and critical groups in this entire
demonetization episode.
We also listened to your address to the nation attentively and carefully
on 31st December 2016 evening, hoping to hear some good news that will
signal an end to the hardships. We had hoped that you will share some
evidence on the gains from this "surgical strike" on the economy. We
have however been disappointed. On the agriculture front, you talked
about the government taking care of the interest on agri loans from
DCCBs and Primary Societies for 60 days, by paying directly into the
bank accounts of farmers. NABARD will be re-capitalising cooperative
banks and societies to a tune of Rs. 41000 crores, you said. You also
said that 3 crore Kisan Credit Cards will be made into RuPay Debit cards
within three months so that they can be used by farmers anywhere. We
find all of these inadequate when the entire season has been affected
badly for the farmers. We also find that this is a rehash of what
already exists.
A reality check against these three major measures that you announced to
ameliorate the sufferings of farmers shows the following:
* When the entire agricultural season suffers due to an adverse effect
on timely operations because of the demonetization move, postponing the
loan repayment period by 60 days or the government bearing the interest
for those 60 days to a tune of Rs. 333 for Rs.50000/- crop loan (usual
short term loan amount for the average farmer covered by institutional
credit) is a pittance against the hardship inflicted, that too in a good
year. It is bad enough that farmers suffer natural disasters of all
kinds, without having to face such surgical strikes in years when they
could have recovered some losses.
* The provision for RuPay and other debit cards against KCC existed
since 2012 and 5.66 million such cards have already been issued in
2013-14 itself. A natural extension of this move by the UPA government
should have actually covered 3 crore farmers by now and it would be
surprising if that did not happen in the natural course of scaling up of
this measure.
* About the infusion of 41000 crore rupees of low interest credit to
cooperative banks and societies by NABARD: this is not new, and in
2015-16, NABARD sanctioned credit limits aggregating 71497 crores under
short term refinance portfolio and Rs. 48,064 crores in long term
refinancing. This is the unutilized last quarter funding that was in any
case available.
* Given all the above, given that no clear benefits have been created
from the demonetization move and our collective sacrifice, and given
that there are no clear timelines indicated on when full cash
availability will be restored, we are forced to conclude that farmers'
hardships do not seem to matter to the government at all.
In fact, your timing of the demonetization move had shown a dismaying
disregard to farmers' livelihood cycles / agricultural seasonal
calendars. Selling of kharif produce was affected as were the rabi
season agricultural operations. Showing higher rabi sowing in 2016-17
against a bad season last year (2015-16) is not the measure to indicate
that demonetization has had no impact on this Rabi. Estimating the
contraction in rabi operations vis-à-vis a good year, without the
demonetization impacts, would be the right thing to do.
In villages all over India, we have come across numerous tales of
hardship and woes, ranging from agricultural workers not being paid in
time by farmers owing to shortage of cash, to farmers cutting back on
investments on the crop management in this season, to farmers not being
able to sell their produce with traders citing their own difficulties
and importantly, loanee farmers from cooperative banks not even being
able to repay their loans! Even timely repairs of machinery are becoming
difficult. The thrift and credit activity in self help groups and their
federations has also been affected. The difficulties of producers of
perishable produce are particularly acute. There are also the hardships
of returning migrant workers, who are unable to find work outside
villages in other sectors.
The biggest negative impact of this entire demonetization process so far
is the destruction that is taking place of the rural cooperative banking
sector,, whereas there is a dire need to actually strengthen rural
banking and agricultural credit in numerous ways, including removal of
political interference.
The DCBs were not allowed to exchange or deposit invalidated 500 and
1000 rupee notes. This affected 12 crore customers of 33 State
Cooperative Banks and 367 District Cooperatives Banks, even though all
these SCBs and 349 DCBs are on the core banking platform. About 5 crore
farmers, despite having fulfilled due KYC norms and having received
kisan credit card loans, are unable to repay loans and reports suggest
that loan offtake has come down drastically. If the current trends
continue, cooperative banks are headed towards decimation.
For those farmers/agricultural workers operating Jan Dhan Yojana
accounts, the norms have been inequitable in terms of withdrawal limits.
Coming to the policy dream of moving India to a cashless/less-cash
digital economy, we can only say that farmers and other rural Indians
would like basic infrastructure and services like uninterrupted power
supply to be ensured, in the first instance, before such dreams can
become a reality. Such services will directly contribute to our
livelihoods and add to the economic growth of the country.
It appears that "war on black money" and demonetization are being used
to forcibly integrate the rural masses into certain techno-financial
regimes. While these assure profits for the corporate sectors that run
these techno-financial systems, they imply tremendous hardships on the
average rural person, whose access to such systems is limited and for
whom such systems will serve little purpose. The implementation of such
a system does not take into account the gap between metropolitan
financial systems and that of the rural and agrarian economies, and
reflects a lack of intimate knowledge about rural economies. In the
final reckoning, the current demonetisation will have introduced new
forms of corruption (as already evident in the commission system for old
notes, the transfer of large amounts of new currency to hoarders and
income-tax evaders), punitive financial systems that will ensure huge
profits to the corporate financiers, and will intensify the
pauperisation of the rural masses, especially small and marginal farmers
who form the bulk of the farming population.
Like other sections of society, we had remained silent since you had
sought sacrifices for 50 days from all citizens, till December 30th, in
anticipation of some major benefits to be gained by the economy.
However, it is unclear what the objective was for this entire exercise
and how it has been achieved. History will remember this scheme as the
most hurtful one since independence, in the name of resolving the
problems of corruption, black money, and terrorism.
During the Pre-Budget consultation on agriculture held by the Finance
Minister on 19th November 2016, one of the important demands of various
farmer unions to the government was to find ways of exempting farming
transactions from demonetization rules. However, no positive
intervention was taken up in this regard, other than to allow farmers to
purchase some inputs like seeds from public sector bodies using
demonetized notes. That was an extremely inadequate response from the
government. There has also been an additional 60 days provided for
repayment of farm loans, in addition to extension of timelines for crop
insurance premium. All of these would have been helpful only if cash
flows were actualizing and were getting enhanced, which is not the case
right now.
Meanwhile, the latest NCRB figures on farm suicides in 2015 highlight
yet again, the deep distress in Indian agriculture, affecting both
farmers and agricultural workers, with a vast majority of the farmers'
suicides being related to indebtedness/bankruptcy. This nation cannot
afford to put any more burden on its *anna daatas* who are keeping the
country fed.
At this juncture, we seek from you the following actions to ameliorate
the hardships being faced by farmers:
>From the black money netted (non-return of demonetized notes back to the
banking system, or from the taxes and revenues collected by the current
crackdown and new tax amnesty measures), each farm household (we are
using an expansive definition of a farmer here to include agricultural
workers too) should be paid through Direct Benefit Transfer Rs. 10,000/-
at least. This would amount to around Rs.1.2 lakh crores of rupees,
which is less than the projections made initially about the outcome of
this war against black money.
Cooperative Banks be immediately brought on par with other banks, first
and foremost. All restrictions on deposits and withdrawals from the
cooperative banks should be withdrawn.
All withdrawal and deposit curbs on farmers should be withdrawn fully
even in the context of Jan Dhan Yojana accounts.
Announce a loan waiver immediately to all farmers, owing to the massive
disruptions caused in the agricultural activities in this season.
With increased NABARD funding, enhance soft loans to Joint Liability
Groups and Self Help Groups. Provide for village level funds to finance
and support women farmers.
Further, in the kisan credit scheme, the scale of finance should be
increased, interest rates should be lowered and agriculture credit
expanded for more coverage.
Given that the cash crunch is expected to continue, set up an
MGNREGS-like mechanism to fund agricultural operations so that all
agricultural operations continue smoothly even as workers get paid by
government into their accounts, from where withdrawals should be allowed
unconditionally. Double the allocation of MNREGA.
Adequate arrangements be made from now itself for Rabi season sales and
marketing to take place unhindered. Adequate cash flows be ensured with
traders and other agencies so that farmers do not suffer in any way.
Government should step in to procure as much as it can, including dals
like arhar which are at present seeing a crash in the markets, and pay
these amounts into farmers accounts immediately.
-------------------------
SINCERELY,
* Yudhvir Singh, General Secretary, All India Coordination Committee
of Farmers Movement (AICCFM)
* Virendra Kumar Shrivastava, President, Laghu Simant Krishak Morach,
Uttar Pradesh
* Virendra Dagar, State President, Bhartiya Kissan Union (BKU), Delhi
Rural
* Vijay Jawandhia, Shetkari Sanghathana, Maharashtra
* Vidyadhar Olkha, State President, Bhartiya Kissan Union (BKU),
Rajasthan
* Sukhdev Singh Gill, State President, Bhartiya Kissan Union (BKU),
Himachal Pradesh
* Satnam Singh Cheema, State President, Bhartiya Kissan Union (BKU),
Uttarakhand
* Rusikulya Rayat Sangha
* Ratan Singh Mann, State President, Bhartiya Kissan Union (BKU),
Haryana
* Rajveer Singh Gadaun, State President, Bhartiya Kissan Union (BKU),
Uttar Pradesh
* Poguri Chennaiah, Rashtriya Vyavasaya Vruthidarula Union (A
Federation of Unions of agri.workers,marginal farmers & Fisher people in
India)
* Paschima Odisha Krushak Sangathan Samanvaya Samiti
* Nallagounder, Uzhavar Ulaippalar Katchi (Tamil Nadu Farmers
Association)
* Mahila Kisan Adhikaar Manch (MAKAAM)
* Krushak Bikash Mancha
* Kiran Vissa, Raithu Swarajya Vedika
* Kavitha Kuruganti, ASHA-Kisan Swaraj
* K. Sella Mutthu, President, Tamil Nadu Farmers Association
* Jayant Verma, Vice President, All India Agragami Kissan Sabha
* Jagdish Singh, State President, Bhartiya Kissan Union (BKU), Madhya
Pradesh
* Gurnam Singh, President, Bhartiya Kissan Union, Haryana
* Dr Sunilam, Kisan Sangharsh Samiti
* Dhan Singh Sherawat, Bhartiya Kissan Union (BKU), Maharashtra
* Deshi Bihan Surakshya Mancha, Odisha
* Com Hannan Mollah, General Secretary, All India Kisan Sabha
* Ch. Rakesh Tikait, National Spokesman, Bhartiya Kissan Union (BKU)
* Ajmer Singh Lakhowal, State President, Bhartiya Kissan Union (BKU),
Punjab
* Adi Krushak Sangathan
Links:
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[1]
https://viacampesina.org/en/index.php/news-from-the-regions-mainmenu-29/2...
[2]
http://media.indiatimes.in/media/content/2016/Dec/cf267b4a-826e-45f9-bfcc...
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