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BW Businessworld

Impact On Agriculture

Demonetisation is not hurting our business as much as it is hurting our mindset, as well as our nature of doing business

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When one sees the chaos and hooliganism going on in the Indian Parliament, especially as an agriculturist businessman, one is compelled to think for what and for whom are these leaders fighting?

Sure, agriculture, which forms the backbone of our economy, may be affected by demonetisation, but it is not bent and nor is it shattered. The soaring prices are just for the adjustment period until the time farmers and agriculturists change their mindset.

Demonetisation is not hurting our business as much as it is hurting our mindset, as well as our nature of doing business.

We were used to dealing in cash mostly without any reason, and we were omitting electronic payments. Now that it has been forced on to us, we are using electronic means of payment. There is no doubt that it is making the farmers and agriculturists uncomfortable. However, it is a big myth that farmers don’t accept electronic payments.

Let me put across some facts: The biggest part of a farmer’s payment comes through government subsidies and government MSP (Minimum Support Price). This comes through a cheque or an electronic payment. Moreover, farmers have received close to $100 billion in electronic payment forms during 2016 through various government schemes.

A strong lobby of middlemen is creating a ruckus to project a false image of farmers refusing cheque payments. The Food Corporation of India has failed in Punjab, but it has succeeded in states—such as Chhattisgarh and Andhra Pradesh—when paying the farmers through cheque for the products bought by them.

The initial reluctant stand was because of a lower threshold of the withdrawal limit. Farmers were being paid by cheque, but they were unable to withdraw the same in cash from the bank. Farmers rely on cash transactions to plan for cultivation and the next harvest. But these are initial hiccups. Once the withdrawal limits come back to absolute normalcy, there will be no reason for farmers to reject electronic payments.

The agriculturists and middlemen who oppose cheque payments on behalf of farmers should understand that farmers will not be reluctant in accepting cheque payments, since most of the villages are now equipped with banks. Also, farmers do not have any tax concerns, as they are exempt from it. The demonetisation step also helps the government fulfill their long ambition of cash subsidies, which would immensely help the farmers. Further, it will help farmers secure better bank loans with good transaction histories and creditability. In fact, post-demonetisation, more than 37 percent of the current rabi crop (more than 22 million metric tonnes) has been traded in mandis.

To sum it up, demonetisation has affected the agriculture sector by causing minor discomfort due to sluggish execution of the scheme. However, the move has also helped farmers in several ways.

Himanshu Agarwal is the Executive Director of the Satyam Balajee Group. Agarwal has successfully extended the export portfolio of the company with some of the most reputed global grain-trading MNCs, and his company is now the largest rice exporter in India with an annual export north of 1 million metric tonnes. Agarwal is a member of the Entrepreneurs’ Organization’s Raipur Chapter.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Himanshu Agarwal

The author is Executive Director, Satyam Balajee Group

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