BE WATCHFUL OF NOTE-BAN IMPACT ON FARMS: REPORT

India needs to be watchful of the impact of demonetisation on agriculture production, income, demand, and loan in rural areas in 2017, the annual Global Food Policy Report said.

Published by International Food Policy Research Institute (Ifpri), the report said India faces rapid economic growth and slower decline in malnutrition.

In November 2016, the government said ~500 and ~1,000 notes would cease as legal tender from the midnight of November 8. The announcement came in the middle of the rabi season, sparking fears of a slowdown in sowing due to cash shortage in rural areas.

In the initial few days, cash shortage did set back the rural economy, but things improved with time. Overall sowing of rabi crops reached an all-time high of over 64.5 million hectares.

The Ifpri report said the government launched several initiatives in 2016, including a crop insurance scheme, path-breaking in terms of coverage and use of technology, and a long-term irrigation fund, with an initial endowment of $3 billion.

“The government launched a unified agricultural marketing e-platform in April 2016, which is a big milestone in improving farmers’ access to markets,” the report said.

It said the rollout of the goods and services tax would reduce tax liabilities and leakages, thereby contributing to higher economic growth.

Ifpri’s report further said that uncertain prospects for economic growth and changing political paradigms in developed and developing countries are creating an unsure global future.

It said that current forecasts of global economic growth for 2017 are slightly positive. After low growth of 2.3 per cent in 2016, growth in 2017 is expected to rise to 2.7 per cent.

It added that overall implications of political and economic changes across the world on domestic and global growth, food policy, trade, and investments in food security and nutrition are unclear.

“Rising within-country income inequality during the period of rapid globalisation, as well as stagnant real median wages, fuels policy uncertainty around global trade and immigration in advanced economies,” the Ifpri report added. It said that within-country inequality is higher now than it was 25 years ago, and the share of income going to the top one per cent has increased in many countries over the last few decades.