In 2016, The India government declared ₹500 and ₹1000 banknotes of the Mahatma Gandhi Series invalid. This announcement led to significant economic disruption. It is said that farmers were affected particularly badly. How exactly did the demonetization affect India's agricultural sector and how large was the effect?


1 Answer 1


Farmers were severely affected by this demonetization as indicated by this paper that thoroughly covers the subject:

Farmers, who are the backbone of our (Indian) national economy, were severely affected by the note demonetization of which invalidated 86% of India’s currency. Most of them will get loans from cooperative banks which now don’t have cash to supply them. So farmers cannot buy seeds, fertilizers and other things required for farming. (..)

India's 263 million farmers live mostly in the cash economy.

The same paper lists in very simple terms the cascade effects for most farmers:

  • no Harvest
  • no sale
  • no cash
  • no purchase of seeds/ fertilizers as they dont use neft/netbanking, debit/credit card.
  • no swip machines in rural areas.
  • Fields are ready for sowing but farmers are unable to purchase seeds/ fertilizers/diesel for sowing.
  • no further sowing.
  • Fruits and vegetables which are perishable in nature are getting unused/un-sell due to no trade in mandis,
  • Farmers are unable to pay to labors

The effects were so tremendous than even the suicidal rates have significantly increased:

The period has been marked with increased farmer’s indebtedness and a rapid increase in farmers’ suicides in large parts of the country, especially in states like Maharashtra, Andhra Pradesh, Karnataka and also in relatively agriculturally better off states such as in Punjab.


You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .