COPING WITH DEMONETISATION

By and large, the ill effects have ebbed in the villages

The demonetisation decision of November 8 last year struck rural India a cruel blow, but it was not a crippling one. Haribhau Gaikwad, 30, a farmer in Nandgaon village, 70 km from Nashik, Maharashtra, reaped a good paddy harvest. But thanks to demonetisation, it sold at a much lower price than the previous year, when the crop had been poor. His friend, grape farmer Banshi Pageri, in the same village, had a bumper grape crop, but again it sold for less than half its price the previous year.

How did they cope? Gaekwad postponed the buying of farm- levelling equipment he had been planning. Instead of buying four bags of fertiliser for his next crop as he usually did, Pageri made do with only one. But despite demonetisation, Gaekwad did buy the LED TV he had been planning ever since his existing 15- year- old TV conked out some time earlier.

“People continued to buy as per their needs, though most of them took credit for extended periods,” says Manohar Gaika, who runs a kirana store in the same village. The same was the experience of Sheikh Mohammud Mohsin in faraway Kherai village in South Bengal. Many customers also offloaded on him heaps of coins they had collected over the years while making purchases. “I had coins worth 1 lakh, which the banks refused to accept,” he says. He still has 70,000 in coins having been able to part with the rest as notes began to circulate again.

“There has been a surge in the opening of bank accounts,” says Manoj Kulkarni, Branch Manager at ICICI Bank’s Ghoti branch in Igatpuri district, Maharashtra. “The number of account holders using digital payment platforms such as NEFT and RTGS to transfer money has also gone up significantly.”

By and large, the ill effects of demonetisation have ebbed in the villages and all is normal again. “I could see a return of positive sentiment by December last year as the rabi crop was good,” says Ramesh Iyer, MD, Mahindra Finance. “The effects of demonetisation are largely behind us.” In Madhya Pradesh, however, some of it lingers with mandis still paying farmers by cheque – often post- dated – instead of cash as before. Meherban Singh, resident of the feeder town of Ghatta Billod, 50 kms from Indore, says that not only did his crop fetch him 2,200 per quintal this year as opposed to 2,800 last year, but the mandis also gave him post- dated cheques. Similarly, Satish Chouhan, a Hero MotoCorp dealer, says that while he usually sold 100 bikes a month, he struggled to sell barely 50 in the period between November and January.