Seed purchases using old 500-rupee note of little use to farmers

Farmers with no access to formal banking need cash to pay for fertilisers, labour and machinery, and to repay moneylenders

As the Rabi crop season approaches, Indian farmers have been in a fix, as they face a cash crunch due to the Centre’s demonetization move scrapping old currency notes worth Rs 500 and Rs 1,000.

Although the new 500- and 2,000-rupee notes are now available, the process of recalibrating ATMs across has taken very long, and many machines are not yet able to dispense these notes. As a result, farmers have not been able to procure seeds through cash purchases and have lost out on sowing time, considered crucial for cultivation during the next season.

(Read: Demonetisation of Rs 500 and Rs 1000 notes: Farmers fear missing out on sowing time)

Taking stock of the situation, the government on Monday allowed farmers to use the old 500-rupee notes to buy seeds for the rabi season.

According to an Economic Times report, farmers can buy seeds from central and state governments outlets, public sector undertakings, national or state seeds corporations, central or state agricultural universities and the Indian Council of Agricultural Research (ICAR). They can enter transactions at these centres after producing an identity proof such as voter ID or aadhar card.

However, this has hardly made things easier for the cash-strapped farmer, who needs to spend on fertilisers, labour and machinery as well. Moreover, many farmers set aside money earned from their produce to repay the loans they have taken from moneylenders, most of whom are unlikely to accept old currency notes.

This means that a majority of farmers who deal in cash and are not a part of the formal banking sector will be struggling to make payments to dealers and labourers.

However, those with access to formal banking will definitely benefit from the slew of measures undertaken to help the farming community during the rabi season. 

Apart from announcing the relaxation in buying seeds, the government had on Thursday increased the withdrawal limit for farmers to 25,000. It had also allowed them a 15-day grace period to pay their crop insurance premiums.

(Read: Demonetisation: Govt tightens exchange of notes, eases withdrawal)