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Monday, December 5, 2016

"How Demonetization Impact on the Indian Agriculture ; A Positive Out look"


"How Demonetization Has Impact 
 on the Indian Agriculture"
 'A Positive Outlook '  

Image Source ; Hsbc.com

Some of the media houses , politicians are  creating a lot of myths about the vanishing  of villages and declining of agriculture, indebted farmers and increased impoverishment in the countryside due to demonetarization.

False pictures form the main plank of the politics and media , we all are  witnessing  a continuous debate on India's agriculture extinction will occur just because of demonetarization and a step forward towards the less cash agriculture economics. One is that of in believing that farmers and the landless folk in the villages are at the end of the tether, and there is a need to rescue them from extinction. It is a very sympathetic and empathetic view of rural India, but it is a foolish one. It is not based on facts and figures but on the skewed their own agenda.We should understand the roots of Indian Agriculture are so deeper and strong since 9000BCE it can not vanish with any of decision whether it is positive or negative For better understanding we must go through recent overview of Indian Agriculture Strengths  ;
  • GDP of agriculture and allied sectors in India till Nov is  recorded at US$ 244.74 billion in FY16
  • According to the advanced estimates of MOSPI, agriculture, and allied sector recorded a CAGR rise of 6.64 per cent during FY07-16
  • Total foodgrains production in India reached an all-time high of 251.12 million tons (MT) in FY15 (as per 3rd Advance Estimates). Rice and wheat production in the country stood at 102.54 MT and 90.78 MT, respectively. India is among the 15 leading exporters of agricultural products in the world. 
  • The performance of agriculture in the last 70 years has been impressive despite monsoon fluctuations , three wars, and  economic ups and down etc.etc. Agricultural growth in five of the last eight years, from 2005-06 to 2012-13, has been above 4%. It was 5.5% in 2005-06, 4.1% in 2006-07, 6.3% in 2007-08, 9.5% in 2010-11 and 5.3% in 2011-12. It was less than 1% in 2008-09 (-0.3%), 2009-10 (0.4%) and in 2012-13 (0.9%).in 13-14 (4.6%)
  • It is a common perspective that   the India  farmers have to lack knowledge about the market , economics , banking and new farming techniques etc.  But the real fact that prevails that Indian farmers are highly skilled and perform different roles A farmer is not just expected to do a job of farming, but he/she also has to perform a role of mechanic, weatherman, veterinarian, businessman, the marketer, scientist and so much more.
  •  Aggregated agricultural production value per ha in India is higher than in the US that practices industrial type farming.
  • India in 2013 earned $26 billion from $ 276 billion trade in commercial services. Whereas agricultural trade of $71 billion fetched as much as $23 billion trade surplus. Thus, agriculture  has the net foreign exchange earnings almost at par with IT service sector. With better focus and facilitation, experts believe that India’s net earnings from agricultural trade can be higher than trade in services. Such export-led revenues will bring in greater rural prosperity 

Indian farmers break the myth of National media and experts who were indicating that Farmers in the middle of the Rabi sowing need to buy seeds & fertilizers and other agro-inputs. But they will  remain run out of cash and  Framers will not be able to buy these much-needed products.  In the midst of the cash crunch, even middlemen will find themselves difficult to help them out. They all were indicating that  sowing of Rabi crop area in the country  will get  declined by its  worst  But the  Sowing operation in the country does not appear to get impacted by demonetization. The latest figures, released by agriculture ministry on 24 Nov. 2016, show that the total sown area under Rabi crops has not only jumped substantially in the past one week but also crossed the last year's corresponding week figure by over 8.5%. Rabi crops as on Friday stand at 415.53 lakh hectares as compared to 382.84 lakh hectare this time in 2015 - an increase of 32.70 lakh hectares.
Another speculation was that the 17 lakh  crore   agriculture food market  conditions are very dire  and a vacuum has created due to which prices are crashed and  fresh foods  product lies  rotting . The situation will only revive  only after people in 7,500-plus man dies and 600,000 villages are re-stocked with the new currency.
A  myth has been created by  so-called intellectuals that Indian farmer will refuse the  cheques  because most of the farmers are not having Banks accounts

  •  In India 14.6 million of rural people works under the    MGNREGA and 80% payments are done by bank        accounts (10 million banks  accounts )
  • Sugarcane farmers accept cheques from sugar factories.
  • The 250 mandis in 10 states that have adopted the electronic National Agricultural Market (eNAM) platform for sale of primary produce are designed for cheque payment. So far, 1.60 lakh farmers, 46,000 traders and 26,000 commission agents have been registered on the e-NAM platform.
  • Farmers now have the option to store their produce in modern warehouses for a market-driven rent and take a bank loan against them.
  • Farmers are accepting cheques from government for all the benefit schemes
  • Moong farmers are accepting cheques from government procurement agencies. Apple farmers accept cheques from large buyers. Potato contract farmers accept cheques from food companies.
  • The seven crore Kisan Credit Cards issued in India, more than one crore are ATM-enabled debit cards.
  • Farmers accept insurance and disaster relief cheques.

So , Nobody has a right to create a false image of an Indian farmer. It is true that the small and marginal farmers who sell off their produce in the village itself are hurt by the demonetization. Similarly, value chains with minimal processing and direct consumer sales such as fruits and vegetables are hit. Most fresh produce is sold by small hawkers and vegetable mongers in the streets of India. Since they take payment in cash and buy their wares from the mandi in cash, business is down. These are symptoms of the crying need for reform
Moreover, a remarkable difference will come if the government uses demonetization to persuade two intermediaries in the value chain — the trader and the village shopkeeper — to adopt electronic payments. All the APMC markets are regulated by state governments and used by the larger traders. They should be made cash-free.
The high incidence of indirect taxes has made it lucrative for wholesalers and distributors to stay below the radar and offer the savings as the discount to consumers in a low-margin and highly competitive commodity market. Tax avoidance has become their formula for survival. A solution can be found through GST.
80% of the rural India  are having mobile connectivity If we  convince the villager’s and local village merchant about the adoption of uses of mobile wallet or card payments   for their agriculture  input sales and  purchase benefits   by educating shopkeepers  about how they can expand business by moving from "cash only" to "cash and card" because it attracts more customers. Electronic payment points should be available at walking distance. Users should find apps easy to use and in their local language. They should quickly receive delivery, be assured of complete back-end security and have plenty of choices. The entry of payment banks will hopefully ease some of these pain points.
Once the agricultural value chain adopts electronic payments and cleans up its books to align itself with the financial supply chain, benefits will follow. The biggest will be the inflow of private and banking capital, which is waiting to power agricultural growth, and social impact capital to improve rural lives
Though   it is a little bit painful process but in long-term, it will not only boost up the rural economy but it will also record of all economic transactions through electronic means makes which are very important as far as farmer community is the concern. The most significant advantage of achieving economies of scale is a reduced cost per unit of  farm production. Most other advantages stem from this primary benefit. A lower cost per unit allows a  farming business to earn a greater profit even when maintaining a similar price point. The producer  could pass on cost savings to customers by operating with a low-price strategy.“When Ola and Uber happened, drivers adapted to technology easily. Economics drives this behavior – farmers will take an effort to acquire knowledge even for small benefits, especially if they can eliminate middlemen.”


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