Money scarcity hits farmers, merchants

Ahmedabad/ Rajkot: The shortage of currency for the past two weeks has impacted trade and industry as well as the agriculture sector to a great extent.
With cash crunch hitting rural belts worst, farmers are not getting adequate payments for their harvest. This is the time when the harvest of Rabi crop is traded in the wholesale markets and APMCs.

“With currency shortage becoming more severe by the day, farmers are not getting their payment dues cleared from . Some of them are forced to sell crops at lesser prices in absence of adequate cash. Several are paid in their bank accounts too but with no cash available in banks or ATMs in rural areas, how do farmers go and withdraw money?,” said Sagar Rabari, president, Gujarat Khedut Samaj.

The state government has acknowledged the cash shortage faced by banks and claims to have taken necessary steps to meet the requirements.

“We have constantly been in touch with the Union ministry of finance as well as the Reserve Bank of India (RBI). This is a nationwide problem and out of the state government’s purview. However, we’re trying to address the local cash shortage faced in different parts of the state. Last week, we sent cash from RBI to parts of north Gujarat and on Tuesday, we sent currency to Surat where there was cash requirement,” said J N Singh, chief secretary.

“We will be sending cash to Saurashtra also from RBI,” said Singh.

On Tuesday, traders in Rajkot market yard complained of cash crunch due to short supply of currency notes and farmers insisting on hard cash in exchange of their produce.

Atul Kamani, president, Commission Agents’ Association of Rajkot market yard, said, “This is the peak season for us. As farmers demand only cash payments, we need Rs 15 crore to Rs 20 crore cash every day to purchase agriculture produce. However, there are barely 7-8 bank branches in the market yard which deliver around Rs three crore to Rs four crore. We get currency notes in denominations of Rs 10, Rs 20, Rs 50 and Rs 100 but not in higher denomination. We have to purchase the produce on credit and in some cases issue cheques too.”

Trade too has been significantly hit due to the cash crunch. “Small traders and those in smaller industries who have to pay daily wagers and clear payments in cash on a daily basis are facing severe problems,” said Jayendra Tanna, president, Gujarat Traders Federation (GTF).

Cooperative banks are among the worst hit. Last week, representatives of Gujarat Urban Cooperative Banks Federation (GUCBF ) wrote to RBI seeking to normalize cash flow. “The situation will only get worse if cash supply is not normalized. If the currency chest does not get adequate supply of notes, how are we supposed to manage disbursals?,” said Jyotindra Mehta, chairman, GUCBF.

Bankers suggest that the currency supplied by the RBI is much less than the actual need. “The actual disbursal of cash is merely 10%-20% of the actual requirement across the state. If this situation continues, cash won’t be easily available in ATMs,” said Janak Rawal, general secretary, Maha Gujarat Bank Employees Association (MGBEA).

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