The Central government had sent a team of 81 bureaucrats to examine the impact of demonetisation on the ground. The team has come back with a grim report – note ban has affected livelihood in rural areas, especially in the farming sector and the sowing season, reported The Economic Times.
The bureaucrats were divided into teams of three, each led by an Additional Secretary, and dispatched on 18 November. The main problem, according to the report, is not the lack of cash in the market, but the shortage of lower denomination notes.
Key Findings of the Report
- The rural economy in Telangana has been badly hit by the “extensive loss of livelihood,” the report says. In the absence of cash liquidity, agricultural produce is selling at a lower cost. There has been a sharp decline in the business of small traders and vendors.
- In Karnataka, there’s been a massive supply shortage of new currency notes, which has further compounded the problem for the agricultural sector.
- In Madhya Pradesh, people are facing hardships even in the urban areas. Banks too, have been feeling the pressure.
- The team in Tamil Nadu has suggested that liquidity in the market needs to be restored as quickly as possible, and pump in lower denomination notes.
- In Uttarakhand, the problems are more apparent in the plains rather than the hilly areas.
India’s banking system has seized up under the strain of Prime Minister Modi’s decision to phase out high denomination banknotes with immediate effect. Its effects are most visible in rural India. The eventual benefits of demonetisation, economists say, are uncertain; but the costs are clear and visible.
Also Read: Currency Ban Is Tearing Rural Banks Apart
Source: The Economic Times
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