Digital India a distant dream: Farmers ask for cash payments to meet needs

Due to several govt regulations, reluctantly, traders pay some part in cheque

Haribhai Bhensdadiya, a 54-year-old farmer in Moti Danudhar village in Jamnagar district of Gujarat, sold cumin seed a few days ago for Rs 50,000. If Bhensdadiya had his way, he would have sold the lot for cash. But the trader who bought his produce wanted at least a part of the payment be made by cheque. 

Bhensdadiya ended up receiving Rs 30,000 by cheque and Rs 20,000 in cash. “Cheques are not convenient, I have to wait for two days for them to clear. I prefer cash,” he said. 

As the government pushes for a cashless society, farmers are yet to come to terms with it. They accepted payments through cheque after demonetisation in November, December and January, but the situation is changing. 

With cash flow normalising, farmers have resumed their demand for payment in cash. But traders prefer to pay by cheque because of several government regulations.

This has led to a rise in dual mode payments (cash and cheque) in varying ratios to farmers in Gujarat, Maharashtra, Punjab and Rajasthan. While the ratio is 50:50 in Gujarat and Rajasthan, in Punjab and Haryana cheque payments are about 70 per cent. 

Farmers claim banking is not speedy in rural areas. Cotton farmers in Punjab who accepted 80-90 per cent of their payments by cheque till January, are increasingly demanding cash.  “This is due to weak banking in rural areas. Farmers want cash for their daily requirements,” said Bhagwan Bansal, president, Punjab Cotton Ginners Association.

“Almost all major banks, apart from the co-operative banks, have been strengthening their operations in rural areas. With banking operations becoming robust, it difficult to understand why farmers are asking for cash payments,” an official said.

Traders said regulations imposed after demonetisation were designed to discourage cash transactions. Parshottam Chothani, a trader at the Lasalgaon mandi in Maharashtra, said, “We cannot pay the entire amount in cash due to new rules. We are asking farmers to accept part payment by cheque.”

According to Kashinath Khade, a farmer from the Vidarbha area of Maharashtra, most small farmers do not have bank accounts. “When we deposit a cheque we get cash after three or four days, but we need the money immediately for our daily needs,” said Khade.

At the peak of the wheat season in Uttar Pradesh, traders are paying 60 per cent in cash and 40 per cent by cheque, a ratio farmers are unwilling to accept.