Indian Farmers Hit Hard By Government's Currency Restrictions
RACHEL MARTIN, HOST:
Maybe some of you out there know this firsthand, but it's really hard to get around in India without cash. Everything works that way. That's how you pay your cab driver. That's how you run a lot of businesses. India is in the middle of changing its currency system, taking some notes out of circulation, and that is wreaking havoc on a whole lot of industries.
NPR's Julie McCarthy tells us the story of some Indian farmers who can't pay their farmhands because of a shortage in cash.
JULIE MCCARTHY, BYLINE: December in the northern state of Punjab, India's breadbasket, and villagers stiffen their collars against the chill and pull their woolen shawls tighter. Farmer Amrinder Singh Punia takes up a seat in the crisp evening across from his newly cultivated 25 acres and contemplates the prospect of a poor harvest come the spring.
AMRINDER SINGH PUNIA: (Foreign language spoken).
MCCARTHY: The smell of damp earth rises, and Punia says, "I didn't plant less, but I had to use more of last year's seeds and less fertilizer on this winter wheat."
PUNIA: (Foreign language spoken).
MCCARTHY: Because traders were late paying for the summer crop, Punia says he lacked the cash to buy new seeds and enough fertilizer for the current crop. On the heels of that, the government scrapped 500 and 1,000 rupee notes, igniting a nationwide cash crunch. Stocks of new notes haven't replenished the old ones fast enough, and many of India's 119 million farmers are reeling in the new financial reality.
(SOUNDBITE OF ENGINE IDLING)
MCCARTHY: The shortage of hard currency could not have come at a worse time. In the Punjab, farmers had barely harvested the summer crop when they began planting the winter one which fell simultaneously with a government currency crackdown. But the seeds, the machinery, the fertilizers, pesticides, the farmhands - all of it is paid in cash, says Manpreet Singh Grewal. He advises farmers through the Punjab Agricultural University, and Grewal says farmers trust hard cash.
MANPREET SINGH GREWAL: They keep cash in hand because it feels safe for them (laughter) to having cash in the pocket rather than keeping it in the bank.
MCCARTHY: Grewal says most farmers in this area eke out a living with plots no bigger than 10 acres and earn on average just under $3,000 a year. They are not nimble operators equipped to deal with the removal of cash from their day-to-day lives.
A bewildering stream of restrictions and flip flops during the currency crisis have confounded them. The agrarian workforce navigates with no credit cards or, Grewal says, in many cases, no formal bank accounts.
(SOUNDBITE OF WHEAT MILLING MACHINE)
MCCARTHY: The hardest hit are the farmhands. Eighteen-year-old Dharam Preet Singh is milling wheat into flour for Amrinder Singh Punia. He says his monthly salary of $120 doesn't cover expenses but is critical to his family. With a 10th grade education, Dharam says he's happy to have the job even if his salary is postponed. But his grandfather needs an operation.
DHARAM PREET SINGH: (Foreign language spoken).
MCCARTHY: "The maximum I can wait," he says, "is 15 more days." "After that," Dharam says, "it will be two months without pay, and my family will be in trouble." Amrinder Singh Punia acknowledges that he is better off than the many farmers who live on the margin, and he was able to withdraw 24,000 rupees - about $350 - from a national bank. He hopes to pay his workers some of what he owes them.
He might have been able to clear all of their back salary, but the government has placed the less formalized network that most farmers depend on, the rural cooperative banks, off limits during the currency switch. Punia has 300,000 rupees tied up in his co-op.
PUNIA: (Foreign language spoken).
MCCARTHY: "My money," he says, "is lying in the bank, and the problem is, I can't take it out." Starved of cash, India's rural economy is stagnating. It could be many months before life returns to normal. Farmers meanwhile do what they often do - watch and wait. Julie McCarthy, NPR News, Punjab, India. Transcript provided by NPR, Copyright NPR.