Note crunch brings village economy to grinding halt

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Chennai, December 29
In a case of being caught between the devil and the deep sea, farmers in Tamil Nadu are neither getting cash from cooperative societies nor loans from relatively cash-flush private banks. With cries for the state to be declared “drought-hit” gaining ground, farmers are reeling under a series of failed crops and demonetisation.
In Trichy, Nellore and Thanjavur, Primary Agriculture Cooperative Credit Societies (PACCS) have not been able to disburse loan amounts.
Farmers, knocking on the doors of commercial banks, find themselves being turned away. “Given PACCS have zero cash, I have to depend on nationalised bank branches; who in turn have numerous restrictions and run out of cash. No private bank is ready to give us money when both monsoons have failed,” said K T Niyathibathi, a farmer in Trichy. Bankers said one of the main reasons for cash shortage in TN is public sector banks like SBI are getting only one-third the allocation of private banks. “If public sector banks were better capitalised, cooperative societies would not have been brought to their knees,” said Vishwas Utagi, vice-president, AIBEA.
Cooperative societies, stemmed by their severe cash crunch, have now started issuing cheques or crediting money into the accounts of farmers. Joint registrar of cooperatives at Madurai, S R Venkatesan said PACCS in Madurai have credited as much as Rs 9.60 crore into bank accounts of 4,148 farmers after demonetisation.
Despite this move farmers have no working capital as they are unable to withdraw the Rs 24,000-a week allowed. “Banks run out of cash early in the morning and only people with influence get the money. Demonetisation was supposed to make things affordable, but so far only the price of vegetables has crashed,” rued A N M Thirupathi a Madurai-based farmer. Banks in the state have been requesting the apex bank for money. “In TN, between SBI, Indian Bank, Indian Overseas Bank and others there are more than 9,000 branches. Yet they get only Rs 7,800 crore per day. Private banks, despite having only 900 branches, get as much as Rs 6,100 crore. How can RBI do this to lakhs of customers of public banks?” asked Subash S Sawant, general secretary of INBEF.
Another problem farmers face is that cooperative societies are being rationed out only Rs 24,000 a week. “The cap has forced us to start parallel accounts for members at Central cooperatives banks so that we can provide crop loans,” said R Arulpragasam president of Poondi PACCS.
In Trichy, the PACCS’s functioning has ground to a halt. “From day one of demonetization, farmers have not got any of the loans sanctioned,” said Swamimalai R Vimalnathan, secretary of Thanjavur District Cauvery Delta Farmers Protection Association.
Unlike what the Centre had in mind, going cashless is not happening any time soon as not more than 5% of farmers have opened new accounts, according to the Thanjavur District Cauvery Delta Farmers Protection Association. Payments of workers’ wages also have run into trouble. Having taken up samba paddy cultivation, Vimalnathan finds that he is unable to get labourers despite having adequate capital because everyone wants Rs 100 notes only.

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