ARTICLE ID : 081216/01

Post demonetisation, Manjit Singh, a farmer in Punjab, is grappling with a new financial reality — a queer mix of debit and credit in cashstarved villages where farmers are beginning to get some payments in cheques while their suppliers want currency notes. 

Farmers are worried about the new debt they are taking with interest rates as high as 36% to make sure they are able to plant and look after the new crop after demonetisation disrupted the cash-based village economy. Many farmers say they are being forced to sell produce at prices far lower than market rates.


Loss of Income

“The cooperative bank structure is dysfunctional and farmers are unable to repay their loans with demonetised Rs 500 and Rs 1,000 notes, along with the fear of paying more interest to banks,” Siraj Hussain former agriculture secretary said
Farmers are, however, reluctant to talk about private moneylenders, whom they do not want to antagonise because they are always available when villagers need cash. A new problem for farmers is that while they are beginning to get payments in cheques, their suppliers only want cash so that the transaction is not reflected in their account.
Increasing  debts
For some farmers, new debts are adding up to older loans that are nearing repayment time.

Kidhar Sirohi, a farmer in Bhuwankhedi village in Harda district of Madhya Pradesh, borrowed Rs 3 lakh from Kshetriya Gramin Bank and Rs 50,000 from a cooperative bank early this year, which he has to repay in two months. He plans to take another loan from a money lender at 36% interest.
(Adapted from an article of Economic Times @

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