DE-MONETIZATION AND ITS IMPACT ON AGRICULTURE SECTOR IN INDIA

Abstract

The agricultural sector is the backbone of India's economy. It accounts for 75% of the country's GDP and is directly affected by the decision to demonetize high-value currency notes. This has put a strain on the country's agricultural sector. Since most of the farmers rely on cash for their day-to-day transactions, the sudden decision to demonetize these notes has affected the income level of farmers. Small and medium-sized enterprises (SMEs) are also affected by the demonetization. Due to the demonetization of Rs.500 and Rs.1,000 notes, farmers had a hard time paying for various essential services, such as fuel, electricity, and fertilizers. They also faced various other problems such as withdrawal of money, cash for purchase of seed, and labor payment. Some of the factors that led to this were the lack of technological development and illiteracy in rural areas.

                        The primary mode of payment for the agricultural sector is cash. During the time of demonetisation, a large number of farmers did not have a bank account. This resulted in them resorting to illegal transactions and practices to meet their cash requirements. The decision to demonetize high-value currency notes has caused various economic sectors to feel the impact of the move. One of these is the agriculture sector, which has been severely hit by the sudden withdrawal of cash. The government should immediately address the issue of cash shortages and supply of currency notes.