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Demonetization crushes rural economy: MP villagers are cashless, getting fleeced

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Sravani Sarkar

Bhopal: Even as hullabaloo is on about the hours urban people are spending in bank or ATM queues to get some usable money, the demonetization decision of the Modi government has almost crushed the rural economy in Madhya Pradesh.

A ground level information gathering by revealed that either the villagers are going totally cashless and thus severely wanting in daily essentials, or they are being fleeced by traders or middlemen in the name of accepting or exchanging the banned currency notes. took information from different parts of rural Madhya Pradesh including Shivpuri, Panna, Khandwa, Mandla and Umaria to find that rural people are the ones most badly hit by the currency ban decision.


Apart from the almost total disappearance of cash in hand that has caused near collapse of retail market and pushed the poorest of people to brink of starvation, agricultural activities have taken a major hit in most areas.

In some areas, harvesting is still on, but in many monsoon crop is ready to be sold and with Mandis (agriculture produce markets) closed for five days till Sunday due to cash crunch, no cash in exchanging hand.

Farmers readying for Rabi sowing are hit particularly hard as they do not have valid cash to purchase seeds, fertilizer, pesticides or even diesel to run their water pumps. Also they are not able to get electricity connections restored.

“Much of the village economy is cash based and naturally every single activity right from purchase of daily edibles to agriculture activities has been affected badly according to our information,” Bhopal-based activist Sachin Jain says.

People in rural areas confirm this.

“Villagers have to travel average 20-25 kms in any of these areas to get their old currency deposited or exchanged and spend hours doing it. Many are sleeping on roads in this cold weather because it gets too late to return,” Prakash of Khandwa-based NGO Spandan says.

Most of the villagers do not have ATMs and any savings they have are held in cash. “I have three notes of Rs 1000, but I am unable to get diesel to run my pump,” farmer Rajaram Saharia of Baidey village in Pohri of Shivpuri told over phone.

Small shopkeepers are finding it difficult to keep afloat. “My sales have dipped from Rs 25,000 per day to Rs 5,000 per day,” Vijay Gupta, a dairy owner at Pohri town said.


In Panna, tribal people have little land holding and thousands are dependent on manual labour in stone quarries. But either work or payments have stopped as contractors do not have cash to pay.

“People are literally left without any money and even food in many cases,” Yousuf Beg of Patthar Khadan Majdoor Union, Panna, told


As for availability of money, he narrated an incident that on Sunday wee hours, he went to an ATM (out of only about dozen available at the district headquarter) in Panna city, a woman who was waiting since earlier rushed to him to enquire whether cash was available.

“When I told her, there was no cash, she almost cried saying that she had no money to buy even food for the day. She didn’t even know how to operate her ATM card,” Beg said.

In Mandla, a youth from Saleghari village in Bicchia block travelled as far as Mandla city on Monday to deposit/exchange Rs 13,000 cash available at his home.  “He was not aware that the day was a bank holiday. He was literally aghast when he came to know as he did not even have enough money to take bus back home. He decided to walk back,” Vivek, a local social activist said.

In Pohri (Shivpuri), villages are as far as 50km from the only working ATM at SBI branch in Pohri. Rural bank branches do not have enough cash to dispense.


In Umaria, villagers were getting essentials worth 70-80% of the cost of the money if they paid in the banned currency, local activist Birendra Gautam said. He added that many retail shops in semi-urban areas are remaining closed.

In Khalwa of Khandwa, tribal from remote villages coming to the weekly markets are getting totally fleeced. Those wanting to sell their produce in small quantity are getting very poor prices (Rs 900 per quintal of Soybean in place of Rs 1100 or Rs 2500 per quintal of Udad pulse in place of Rs 5000). Since most of them make their purchases after selling their produce, they are forced to bear the loss.

Similarly, those carrying the bigger denominations were getting the essential things (tribal purchase their vegetables, grains and any other needed material for entire week from the weekly markets) only if they make purchases close to the round figure (Rs 500 or Rs 1000). Else they are made to go back.

“Since tempos and private transport vehicles are also demanding change money, many villagers are walking back,” Prakash said.


The latest decision of the Reserve Bank to not allow the local cooperative banks to accept Rs 500/1000 notes has come as an additional blow to the rural economy.

This means that farmers holding the Kisan Credit Cards cannot make any transactions at the 38 district cooperatives banks and their 635 agriculture branches, as announced by chief minister Shivraj Singh Chouhan. This would almost completely block their fund requirements for Rabi sowing.

Another big impact would be on the fair price (public distribution system) shops that work under these cooperative banks and therefore they would not be able to accept Rs 500/1000 notes.