Lift freezing of financial transactions of district cooperative banks, redress farmers’ woes

screenshot-from-2016-11-20-070159The Khedut Samaj – Gujarat took out a huge vehicle rally in Surat, submitting a memorandum to the district collector on how the Government of India’s demonetization move has adversely affected the state’s farmers. The memorandum is addressed to Prime Minister Narendra Modi and chief minister Vijay Rupani. Text:

The Government of India announced a sudden decision on 8th November 2016 to demonetize the existing currencies of Rs. 500 and Rs. 1000 denomination. We do not here want to comment on this decision itself. However, the announcement of demonetization was done without adequate preparation, thus bringing untold hardship to common persons, especially the farmers.

You are aware that the monsoon crops of cotton, groundnut, sugarcane and paddy have reached the markets. At present, even the traders of the Agricultural Produce Marketing Committees (APMCs) do not have the capacity to buy these crops. Similarly, cooperative societies facing a cash crunch also need lakhs of rupees daily to disburse to the farmers.

Because of the freeze on District Cooperative Banks’ and their financial transactions, the cooperative societies are in a bind: they cannot turn down the farmers and their produce but they also cannot pay them the cash for the produce. The farmers also have to undertake preparations for the winter crop for which they require cash.

The vegetable growers cannot sell their produce in the market (due to the cash crunch there are no buyers) and due to a paucity of warehousing and cold storage infrastructure they are not in a position to hold on to the produce either. Ultimately the cash crunch also affects the final purchases and sales by the end consumers in the retail market.

Currently the farmers are scrambling in order to meet the daily cash requirements for the winter crop such as seeds, fertilizers, fuel and wages.

You are aware that even today, most villages of Gujarat do not have branches of nationalized banks and very few of the rural people have the ability to operate accounts. But even the few who do have accounts, have them with the branches of the District Cooperative Banks. The accounts of the Milk Cooperatives and the Agricultural Cooperatives are also linked to the District Cooperative Banks.

The government’s action of keeping the District Cooperative Banks outside the purview of financial transactions smacks of distrust on farmers, milk producers and cooperatives. On account of this ill-thought decision the farmers, Maldharis, agricultural labourers in rural Gujarat have been reduced to the plight of beggars despite having money on them.

With a cash withdrawal limit of Rs. 3000 against a daily requirement of lakhs of rupees daily in the peak agricultural season is making it difficult for the farmers to continue their agricultural operations. This is not on account of the any natural or climatic conditions; this is solely on account of the half-baked preparations and seeming haste in making the announcement of demonetization.

This is a disaster brought on by the government, and it is the responsibility of the government to alleviate the miseries of the people. We request the Government of India to take the following measures to alleviate the miseries of the people:

  1. Lift the freeze on District Cooperative Banks on carrying out financial transactions;
  2. If there is severe distrust of the District Cooperative Banks then use their infrastructure to open counters of the RBI on their premises;
  3. Similarly, use the infrastructure of the Cooperative Societies o open counters of the RBI on their premises;
  4. Allow the account holders of the District Cooperative Banks to withdraw as much as their balance allows them to;
  5. Help and direct the RBI to open counters at as many places as possible in order to tackle the long queues and unending wait.

If the Government of India fails to address the issues and difficulties of the people then:

  1. The winter season will be a failure for the farmers and the farmers, already distressed by the low prices in the monsoon season, will be further distressed;
  2. If the crops of vegetables, wheat, sugarcane and paddy are affected there will be an unprecedented rise in the prices which will affect the entire population of the country;
  3. Owing to lack of cash liquidity and difficulty in procuring essential items there may be issues of law and order that also arise;
  4. There will be direct impact on trade and thus on wages;

How will the government govern in the face of such unsurmountable difficulties? We thus request you to take immediate steps to redress the deteriorating situation at the earliest and in a decisive manner.


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