Tomato on its toe: At 50 paise a kilo, Chhattisgarh farmers prefer crushing their produce under trucks

http://indiatoday.intoday.in/story/tomato-fifty-paisa-demonetisation-chhattisgarh-marathwada-bihar/1/831298.html

With prices in a free-fall due to demonetisation, angry farmers have chosen to crush their tomato produce under trucks, instead of selling it at 50 paisa per kg. And their story is just one of many.

Mohak Gupta | Edited by: Vishakha Saxena

New Delhi, December 9, 2016 | UPDATED 22:51 IST

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Infuriated, but managing to stay alive, farmers in Chhattisgarh's Raigarh district spread their tomato produce at the spot that was their regular marketplace, but only so they could crush it with trucks.

It was an act they found more respectable than selling the result of their hardwork at 50 paise per kg.

According to a report in Counter Currents, these farmers were forced to sell 100 kg tomatoes for a mere Rs 50. The per kilo average comes down to a paltry 50 paise - a coin as good as crushed tomatoes (despite being legal tender).

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Devinder Sharma @Devinder_Sharma

Angry farmers in Ramgarh dist in Chhattisgarh dumping tomato on highways. Getting market price of Rs 50/qntl only.

6:05 PM - 7 Dec 2016

 
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WHY ARE THE FARMERS ANGRY?

Farmers in Chhattisgarh's Pathalgaon and Farsabahar saw an incredible tomato produce this year. They didn't get much time to revere it though, as Modi's demonetisation changed the equation.

The 'anti-black money' drive hit them where it hurts the most, and did nothing to save them from the middlemen who added to their misery. That's when the angry farmers decided to dump their produce on the roads, to have it crushed by the same trucks that would have carried it to the market.

The problem is not just the deflation in prices brought about by demonetisation. It is further exaggerated in the region by the move's repercussions like:

The region fought a four-year-long battle with droughts, and just when they experienced a good period of rainfall, they were hit by demonetisation.

A dried up well in Maharashtra's drought-prone Pambharne village. Photo: Mandar Deodhar

Narayan Surey, a young Marathwada farmer, finally earned Rs 75,000 from his first lot of corn this year. But the money did him no good, as he was paid by cheque. He now has to wait the long queues at banks to dry up, so he can get a chance to withdraw the money and invest in the new sowing season.

And that's not even his biggest problem, as another 100 quintal of corn lies idle with him, in search of buyers.

Original Photo: Twitter - @Devinder_Sharma

These tomatoes are grown across 4,200 hectares of land and the produce feeds as many as 4,000 farmers and their families. That is, if they manage to sell it at the industry-standard price.

In 2010, Chhattisgarh Chief Minister Raman Singh promised to set up a cold storage unit to protect perishable crops. And over six years have passed, but cold winds still don't blow. Farmers have also demanded a food processing unit, but to no avail.

Demonetisation only worsens the situation, as the currency ban has created such a hole in farmers' pockets, that they are now struggling to even cut through logistic costs.

IT'S NOT JUST CHHATTISGARH FARMERS

Wholesale vegetable dealers in Bihar are going through similar hard times.

According to a Scroll.in report, "Cauliflower was selling for Rs 12 a kilo just before the announcement on November 8. It is now selling for one or two rupees."

Similarly in Maharashtra's Ahmednagar, Sanjay Gunjal, a cabbage farmer, told Hindustan Times how he earned just Rs 6,000 for his entire acre of produce. Before demonetisation, though, he would have earned Rs 80,000 for the same.

For onion-growers, demonetisation presents a different misery. Onion cultivation is a cash and labour intensive process, but with the sudden ban on most available currency, farmers have had no choice but to abandon their crops mid-way.

"I had to abruptly stop, as there was no cash to pay labourers and they weren't ready to take the old notes lying with me. Nor are the new Rs 2,000 notes of any use, because people know you can't buy daily essentials and get proper change with these," 42-year-old Nandu Awati told Indian Express. "Last two years, we suffered from drought. This year, we have enough water, but this cash crunch has upset all our calculations," he said.

THE MANY WAYS THEY SUFFER

The demonetisation-prompted fall in crop prices may be good for consumers, but for farmers it only spells tragedy.

Worst off will be those farmers who have taken loans to buy raw material for growing crops. Failure to get a legitimate price on their produce, will push them under massive debts, burdened by interests.

Small farmers are also suffering a cash-crunch due to demonetisation, as many have crops lying around, but with no buyers whatsoever.

Such is the story of Maharashtra's Marathwada.

Note Ban shatters companies

source: http://www.thehindu.com/news/national/Note-ban-shatters-Morbi-the-ceramic-hub-of-Gujarat/article16711661.ece

Cash crunch has crippled the entire value chain of this manufacturing cluster which employs more than four lakh daily wage workers

Once a booming ceramic hub, Morbi has been left moribund by demonetisation and the subsequent curbs on cash withdrawals, with its 600-plus factories on the brink of closure. Lakhs of daily wage workers, mostly migrant labourers from other States, have been rendered jobless and many have returned home.

As of now, more than 50 per cent of the factories are shut and more are likely to follow suit by the end of the month with the cash crunch crippling the entire value chain of this ceramic tiles manufacturing cluster which employed more than four lakh daily wage workers from Uttar Pradesh, Bihar, Odisha, Andhra Pradesh and Rajasthan.

“More and more factories are shutting because we have no raw material to run factories as we don’t have cash to pay transporters for bringing in raw materials and dispatch finished products and pay labourers,” said Khimjibhai Kundaria, president of the Morbi Ceramic Tiles Association.


Though lauding Prime Minister Narendra Modi’s intention to curb black money, Mr. Kundaria said the industry ran on cash transactions for payments to transporters and labourers. “Each factory needs Rs. 20-80 lakh per month for payments to labourers and Rs. 1-4 lakh per day for transporters. If we don’t get cash, we cannot survive,” he said.

According to him, the total turnover of the ceramic cluster in Morbi was Rs 24,000 crore in 2015-16. “We have no work for two weeks; so we are about to leave for our village near Lucknow. Many [workers] have already left as factories are shut and there is no money also,” said 46-year-old Ramkishor Yadav, a daily wage worker, who has been working in Morbi for six years.

According to Mr. Yadav, a majority of migrant labourers employed in tile-making units and other auxiliary industries like paper mills, transport and construction, do not have bank accounts as they cannot furnish a permanent address since most of them live in shelters within the factories.

“I am paid Rs. 300 a day for work in the factory, which is closed for 10 days now. The owner has given two weeks’ wages and asked us to come after a month if the factory reopens. Now we will have to go back to our village in Bihar where there is no work at all,” said Prabhat Yadav, sitting with his colleagues outside a factory. Like Prabhat and Ramkishor, thousands of workers have already left Morbi.

“The association has decided that all workers will be given two weeks or one month salary even if the factories are shut but we cannot sustain beyond that,” Mr. Kundaria said. “Nearly 30,000 labourers must have already left now.”

“Labourers are leaving and unlikely to return till they are assured of work. It is becoming difficult by the day as cash crunch is only worsening,” said Pankaj Patel, a labour contractor who supplies workers to factories. Besides ceramic tiles factories, the Morbi cluster is also home to around 100 small units making wall clocks that employ more than 15,000 women. “The clock-making units are women-driven cottage industries and our annual turnover is around Rs. 300 crore. Since there is no cash, we are badly affected as production has dipped; we have no cash to pay workers,” said Shasank Dangi, president of the Clock Manufacturers Association.

Making of a mammoth tragedy - MMS

Source http://www.thehindu.com/opinion/lead/Making-of-a-mammoth-tragedy/article16779252.ece

The decision to demonetise will cause grievous injury to the honest Indian who earns wages in cash. The dishonest black money hoarder will get away with a mere rap on the knuckles

It is said that “money is an idea that inspires confidence”. At the stroke of the midnight hour, on November 9, 2016, the confidence of more than a billion Indians was destroyed. Prime Minister Narendra Modi had declared that more than 85 per cent of the value of money held in notes of Rs.500 and Rs.1,000 was worthless overnight. In one impetuous decision, the Prime Minister has shattered the faith and confidence that hundreds of millions of Indians had reposed in the Government of India to protect them and their money.

The Prime Minister in his address to the nation said, “there comes a time in the history of a country's development when a need is felt for a strong and decisive step,” and propounded two primary reasons for this decision. One was to check “enemies from across the border… using fake currency notes”. The other was to “break the grip of corruption and black money”.

Both these intentions are honourable and deserve to be supported whole-heartedly. Counterfeit currency and black money are as grave a threat to the idea of India as terrorism and social division. They deserve to be extinguished using all the firepower at our disposal. However, the popular saying “the road to hell is paved with good intentions” serves as a useful reminder and warning in this context.


The underlying premise behind the decision of the Prime Minister to render Rs.500 and Rs.1,000 currencies as illegal overnight seems to be this false notion that ‘all cash is black money and all black money is in cash’. This is far from reality. Let us understand why.
Life thrown into disarray

More than 90 per cent of India’s workforce still earn their wages in cash. These consist of hundreds of millions of agriculture workers, construction workers and so on. While the number of bank branches in rural areas have nearly doubled since 2001, there are still more than 600 million Indians who live in a town or village with no bank. Cash is the bedrock of the lives of these people. Their daily subsistence depends on their cash being accepted as a medium of valid currency. They save their money in cash which, as it grows, is stored in denominations of Rs.500 and Rs.1,000 notes. To tarnish these as ‘black money’ and throw the lives of these hundreds of millions of poor people in disarray is a mammoth tragedy. The vast majority of Indians earn in cash, transact in cash and save in cash, all legitimately. It is the fundamental duty of a democratically elected government in any sovereign nation to protect the rights and livelihood of its citizens. The recent decision by the Prime Minister is a travesty of this fundamental duty.

Black money in India is a genuine concern. This is wealth that has been accumulated over years by those with unaccounted sources of income. Unlike the poor, holders of black money have access to various forms of wealth such as land, gold, foreign exchange, etc. There have been various attempts by many governments in the past decades to recover this illicit wealth through actions by the Income Tax department, the Enforcement Directorate and schemes such as Voluntary Disclosure. These measures were targeted strikes at only those suspected to be holders of such unaccounted wealth, not on all citizens. Evidence from these past attempts has shown that a large majority of this unaccounted wealth is not stored in the form of cash. All black money is not in cash, only a tiny fraction is. Against this backdrop, the decision by the Prime Minister is bound to have obverse implications by causing grievous injury to the honest Indian who earns his/her wages in cash and a mere rap on the knuckles to the dishonest black money hoarder. To make it worse, the government has actually made it easier to generate such unaccounted wealth in the future by the introduction of a Rs.2,000 note. This brazen policy measure has neither tackled the stock of black money holistically nor has it stemmed the flow of it.

It is no surprise that the logistical challenge of replacing billions of old currency notes with new ones is a monumental one. It is a huge challenge in most nations, and in a country as vast and diverse as India it was bound to be doubly so. This is also one reason why most nations that have undertaken such currency swap operations have done so over a certain time period and not as a sudden overnight operation. It is heartbreaking to see and hear of millions of poor Indians standing in long lines to withdraw some money for basic sustenance. As someone who has experienced long lines for rationed food during war time, I never imagined that one day I would find my own countrymen and women waiting endlessly for rationed money. That all of this suffering is due to one hasty decision makes it even more disconcerting.

The macroeconomic impact of this decision of the government is likely to be hazardous. At a time when India’s trade numbers are at multi-year lows, industrial production is shrinking and job creation is anaemic, this policy can act as a negative shock to the economy. It is indeed true that India’s cash to GDP ratio is very high vis-à-vis other nations. But this is also an indicator of the Indian economy’s dependence on cash. Consumer confidence is an important economic variable in a nation’s growth prospects. It is now evident that this sudden overnight ban on currency has dented the confidence of hundreds of millions of Indian consumers, which can have severe economic ramifications. The scars of an overnight depletion of the honest wealth of a vast majority of Indians combined with their ordeal of rationed access to new currency will be too deep to heal quickly. This can have ripple effects on GDP growth and job creation. It is my humble opinion that we as a nation should brace ourselves for a tough period over the coming months, needlessly so.

Unintended consequences

Black money is a menace to our society that we need to eliminate. In doing so, we have to be mindful of the potential impact on hundreds of millions of other honest citizens. It may be tempting and self-fulfilling to believe that one has all the solutions and previous governments were merely lackadaisical in their attempts to curb black money. It is not so. Leaders and governments have to care for their weak and at no point can they abdicate this responsibility. Most policy decisions carry risks of unintended consequences. It is important to deftly balance these risks with the potential benefits of such decisions. Waging a war on black money may sound enticing. But it cannot entail even a single loss of life of an honest Indian.

Dr. Manmohan Singh was Prime Minister of India from 2004 to 2014.

75% cash in | So almost all white?

http://www.thehindu.com/business/Economy/Deposits-of-withdrawn-notes-nears-Rs.11-lakh-crore/article16738256.ece

Deposits made in the banned currency notes may have reached close to Rs 11 lakh crore within 21 days since the demonetization drive started and with one month to go till the time the banned notes can be deposited, bankers are saying the objective of the entire exercise will be under cloud if 90 per cent of the notes that were banned, are deposited.

The high value notes were banned to curb the stock of black money in circulation.

According to Reserve Bank of India (RBI) data, the total value of Rs 500 and Rs 1000 notes that were in circulation was Rs 14.18 lakh crore, as on end March 2016. There were 15,707 million pieces of Rs 500 notes and 6,326 pieces of Rs 1000 notes.





RBI had said Rs 8.45 lakh crore was deposited and exchanged between November 10 and November 27. The note ban was implemented from November 9 and from November 10, banks started accepting the banned notes.

Such notes can be deposited in banks and post offices till 30 December.

“Rs 8.5 lakh crore was already deposited by 27 November. So it is quite possible that the figure has gone close to Rs 11 lakh crore,” banking industry sources said.

Between 28 November and 30 November, State Bank of India – the country’s lender that commands 17 per cent market share, saw deposits increasing by Rs 22,000 crore.

The government was expecting Rs 10 lakh crore to come back into the banking system, as per the Attorney General’s submission to the Supreme Court.