PATHARDI: DEMONETISATION AND ITS VICTIMS

A week after Prime Minister Narendra Modi announced the decision to scrap old ~500 and ~1,000 currency notes, business in the agricultural market of Pathardi, 350 km east of Mumbai, fell by 60 per cent, indicating how the rural economy of India’s richest state, Maharashtra, recovering from two years of drought, is slowing.

Pathardi’s Agriculture Produce Market Committee (APMC), representative of 2,500 such markets in India, is where most agricultural trade in the region takes place – almost all of it in cash. A slowdown in these markets can have wide-ranging effects on farmers, traders and the Indian agricultural economy.

The arrival of vehicles loaded with agricultural produce entering the Pathardi market fell by 75 per cent, the arrival of cotton dropped by 80 per cent, and the sale of cattle fell by 50 per cent in comparison to the week before the ban of notes, show data gathered by IndiaSpend from market officials.

Demonetisation has pushed farmers who transact in cash and are still largely distanced from formal banking institutions – out of the farm economy. Bhimsen Mahadev Ghuge, a 50-year-old cotton farmer, lost 15 per cent on a cotton transaction. He did not want the money in old notes, so he sold his produce to an unregistered trader outside the APMC market gate for ~4,200 a quintal, lower than the market rate of ~5,000 a quintal.

“I have to manage my family expenses and pay the wages of labourers who work in my farm in ~100 notes,” Ghuge said. “I have incurred a huge loss this season.”

Traders at the Pathardi market were willing to pay for produce and cattle in old notes or, new notes of ~2,000. But, farmers, whose daily expenses are much lower, are unwilling to take ~2,000 notes, unsure of whether they would be able to change it for more usable notes of smaller denominations.