Demonetisation: Cash limit relaxation at <i>mandis</i>

Govt has allowed withdrawal up to Rs 25,000 a week against crop loans sanctioned and credited in their accounts

To ease the acute liquidity crunch which has nearly halted trading in wholesale markets, the government on Thursday allowed those registered with Agricultural Produce Market Committees (APMCs) to withdraw up to Rs 50,000 a week from their bank accounts.

For farmers, the government has allowed withdrawal up to Rs 25,000 a week against crop loans sanctioned and credited in their accounts.

The Centre has also decided that the time limit in crop insurance premium cases will be extended by 15 days. The same limit would also apply with regard to their Kisan Credit Cards.

Trading in India (2,477 regulated markets or APMCs and 4,800 sub-market yards) has come to a near-standstill after the government withdrew high-value currency notes.

Most traders say the cash rule relaxation would have no impact on wholesale markets ('mandis') in big cities. However, in mandis at smaller towns and rural areas, it could provide some relief.

"The withdrawal amount of up to Rs 50,000 a week will only help small traders and those who deal in leafy vegetables like spinach, coriander, etc. For others, this limit is hardly any relief," Trilok Chand, a potato trader from the Azadpur APMC in this city, told Business Standard.

He said for a week, most traders had stopped ordering big quantities, as dealers down the line were not willing to pay cash and liquidity had dried."Usually, during this time of the year, 175-200 trucks of potatoes arrive daily in Azadpur. Nowadays, only around 90 are arriving, as transactions have gone down," he said. One truck usually carries 10-13 tonnes of potato.

Abhay Kumar, secretary of the Lohardaga APMC in Jharkhand, said the move should give some relief to traders but the extent would have to be seen in the coming days.

READ OUR FULL COVERAGE ON THE MODI GOVT'S DEMONETISATION MOVE