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This article was first published 7 years ago  » Business » 'Modi has gone completely wrong on demonetisation'

'Modi has gone completely wrong on demonetisation'

By Syed Firdaus Ashraf
December 13, 2016 12:38 IST
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'Farmers are like a living corpse in India.'

P Chengal Reddy, secretary general, Consortium of Indian Farmers Association, recently wrote to Prime Minister Narendra Modi highlighting the adverse impact that the Bharatiya Janata Party government's demonetisation policy has had on the agriculture sector.

Reddy tells's Syed Firdaus Ashraf why he sent Modi an SOS from farmers.

You told Prime Minister Modi that the cashless concept is turning out to be as difficult as creating a caste-less society in India. What do you mean by that?

As my guru (the late Shetkari Sanghatna founder) Sharad Joshi said the country is virtually divided into India and Bharat. The division is evident even now when Modi speaks about so many things.

90% of farmers are dependent on food, vegetables, diary, goats and fish.

Now, who are these people? They are small farmers; they are women and family labour. They own hardly half an acre or small plots where they grow vegetables.

They sell their produce and earn money (in cash).

The same is the case with small fishermen who are a century behind compared to the rest of Indian society.

But demonetisation will bring these farmers and fishermen into the banking system...

When there are no schools and hospitals in villages, how do you expect banks to reach such places?

How will banks reach the deserts of Rajasthan or the tribal areas of Chhattisgarh, Telangana, Madhya Pradesh, Jharkhand and the North-East?

What people in villages want is education for their children, health facilities, and these things are not available in many villages.

Modi or even (Congress President) Sonia Gandhi never went to a farm and did farming.

Agriculture is not a cultural activity.

Look at Denmark and Israel. They are booming (in agriculture) because of four fundamental things -- technology, investment, markets and management of agriculture by the best people.

Today, agriculture is an enterprise.

When India claims to be achieving 8% to 10% growth consistently in the service industry after 26 years of liberalisation, why is the farm sector struggling day and night to grow by 1%? They have no answers.

The problem is that the politicians and bureaucrats in Delhi are not exposed to agriculture.

Do you feel the Modi government is city-centric and does not understand the problems faced by India's villages?

It is not just about Modi or Sonia Gandhi or Rahul Gandhi. The moment they occupy the chair they are surrounded by bureaucrats, industrialists and so-called city-based experts who join the coterie.

Look at the Prime Minister's Office. It has the same IAS officers for the last 20 years. How will they change their mindset just because Modi has become prime minister?

Modi looks to be very smart, but he is not. He has clarity (only) on Pakistan and foreign affairs.

You also mentioned in your letter to PM Modi that the Kharif crop is sold immediately after the harvest to repay borrowings and reinvest in the Rabi crop.
Both are not likely to happen after demonetisation.
Will this lead to a food shortage?

This is my assessment. I am not an economist or scientist, but a social worker. I call this common sense.

Today, even if farmers have got their harvest there are no buyers.

Earlier, there used to be an informal sector that used to buy (the harvest), but today everything has stalled at every point.

Why are there no buyers? Is it because there is a shortage of cash or lack of demand from consumers?

To an extent currency yes, but more than that Modi is trying to operate this entire system through banking.

Legally speaking, it is good, but you should have done this over a period of 5 to 10 years.

In a village, people used to lend money or take loans from each other; that was the system. It was an unaccounted system.

Now, Modi, through demonetisation, wants to channelise this through the banking system and bring in an accounting system.

The moment an accounting system comes in, everything follows like sales tax, income tax, rules and regulations.

The first reaction is that of shock.

Everybody is scared and they have run away. They are not visible.

They have not come to purchase my wheat and rice, and I am not sure when I am going to get them back.

Have the traders run away?

Yes, you call them traders or middlemen. They are not coming to the farmers to purchase wheat and rice.

And I am not sure when I am going to get them.

At least 86% of our farmers are small and marginal. These farmers have less than two acres of land. They have no education.

Can't the farmers go to government mandis (markets) and sell their produce?

You are very right. In 1996, I was one of the members who worked vigorously on marketing reforms (from the government side). Where are we now?

Market reforms have not come. It is the middlemen who have the monopoly.

It is the government which needs to be efficient. I am not supporting or opposing anybody.

I am only telling Modi that these are not practical things; you have to do this a little slowly.

The very concept of Modi has gone wrong because black money control does not mean demonetisation.

Modi has gone completely wrong on demonetisation.

Black money is generated through corruption and tax evasion.

Instead of controlling that, he took the other way.

Now, tell me how many people with Swiss bank accounts or those named in the Panama Papers were caught?

How many corrupt people were caught in the last two-and-a-half years of Modi's rule?

Since you say the traders have run away, are there not enough government mandis where farmers can sell their produce?

There are government mandis, but they have been taken over by commission agents.

There are some officers who are supposed to supervise the transactions, but 90% of them do not do anything.

They are corrupt, they exploit and cheat.

How many government mandis are there in India?

There are 7,000 to 8,000 government mandis.

So has agricultural activity completely stopped in all these mandis?

Never use the word, completely stopped. It is slow and steady deterioration.

In Hyderabad, 28 trucks of pomegranates used to arrive in a week. Now that has reduced to 5 trucks.

Now you have to understand that 28 trucks of pomegranates were consumed by 'X' number of people and 'Y' number of people used to produce that much quantity.

So why is there a fall in the number of trucks? There is nobody to purchase pomegranates.

Instead of harvesting pomegranates worth 28 truckloads, farmers are harvesting only 5 truckloads.

This is happening because there is nobody to purchase the pomegranates.

The same is happening for every food item, especially perishable food.

But there is no outrage among the farmers.

In the last 70 years, have you ever seen farmers revolting in India?

They do not because they are the living-dead people.

Farmers are like living corpses in India. There is no life for them in India.

So will there be a food shortage in the future?

The production of onion, tomato and other crops is slowly reducing because there are no buyers.

If you look at this (demonetisation) from the farmer's point of view, he feels that his income has reduced and there is a cash shortage.

So he will invest less and produce less.

These rascals in Delhi are not duffers; they have already announced that there will be zero tax if you import wheat.

The whole problem is that they are not interested in sustaining agriculture or safeguarding the interest of the farmers.

They are manipulating things, but not solving things for farmers. That is a big problem.

You told PM Modi that his government does not understand the fundamentals of agriculture.

Certainly! The Modi government does not understand agriculture.

If they did, they would have not made someone like Radha Mohan Singh agriculture minister.

He does not understand anything about agriculture.

Cooperative banks were not allowed to function post demonetisation. How do you view that move?

It was a wrong move. The Modi government felt that cooperative banks are not trustworthy. That is absolutely nonsense.

Farmers in villages depend more on cooperative banks than nationalised banks.

Today, there is no money in the cooperative banks. The government is not pumping any money into them.

I thought one could withdraw Rs 2,000 from cooperative banks.

If I am hungry and go to the temple for food, I don't need prasad. I want a full meal.

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