WARANGAL: Demonetisation of big currency notes have hit the cotton industry very hard as farmers want cash for their crop while the traders do not have enough of it to procure the produce.
Since Rs 500 and Rs 1,000 notes are no more legal tender, cotton traders are issuing cheques to farmers putting them in a catch 22 situation. If they deposit the cheque in their accounts, banks may cut the interest on the loan taken by them and give them the balance only, forcing them to borrow again from private money lenders for purchasing fertilisers and other inputs for rabi season.
Fearing this, the cotton farmers are now requesting the traders to give them their amounts in cash. “After demonetisation the farmers started demanding cash in lower denomination but since we do not have small currency in large sums we started issuing cheques to those having bank accounts. But they are demanding net cash for their produce as they fear that if they deposit cheques, banks may recover loan interest from the amount,” K Samaiah at Enumamula market yard in Warangal told Express.
According to Samaiah, the farmers are ready to wait for a week to 10 days for the cash but not accepting cheques now. “I am not accepting cheque since I would lose a lot of money, if I do so. In fact, I may get just 10 per cent of the amount deposited. It is better to wait rather than lose money,” P Kamraj, a cotton farmer from Bhimavaram said.
The traders were also finding it difficult to pay farmers as the government has put a cap on withdrawal at Rs 24,000 per week.