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Demonetisation hits north Bengal hard

 Ashis Biswas |  2016-11-22 21:09:28.0  |  New Delhi

Demonetisation hits north Bengal hard

North Bengal districts have been hit hard by the Centre’s demonetisation decision. In particular, agricultural production, the most important part of the rural economy and informal sector activities like brick making, have been negatively impacted. The daily financial loss runs into crores of rupees, as both production and employment have almost come to a halt.

The cash crunch in North Bengal districts has been worse than elsewhere, not least because there are more villages and blocks in rural areas that are without any banking services. Conditions were made even more challenging as certain recent directives from the Centre to local co-operative banks came into force, jeopardising their functioning.      

Suggestions to the Union Finance Ministry to strengthen the cooperative banks have come from both the ruling Trinamool Congress (TMC) and the CPI(M), in opposition. Sourav Chakravarty, TMC leader and Chairman of the Jalpaiguri Central Co-operative Bank, pointed out that the Reserve Bank of India had by its order of November 14 forbidden transactions involving old currency notes of Rs 500 and Rs 1000 denomination. Further, another RBI directive three days later instructed co-operative banks not to accept such notes from other banks as well.

This has made it difficult for the Jalpaiguri-based bank with an annual turnover of Rs 160 crore, to advance new loans to farmers and peasants. The reason: there was no supply of newly minted Rs 500 and Rs 2000 notes. Also, the RBI’s directives made it impossible for farmers to repay their old loans either, new notes being unavailable. This, said Chakravarty, had brought banking activities to a standstill. It had also hit nearly 50,000 people who depended on agriculture for their livelihood, very hard indeed. 

He said that the Centre must take responsibility for the present deadlock in economic activities in Jalpaiguri and intervene immediately to help improve the situation. Otherwise, TMC will have no alternative but to go on ‘dharna’ outside RBI office.

During the recent Rajya Sabha discussion on the present situation, CPI(M) General Secretary, Sitaram Yechury, had suggested that the Centre should immediately help the co-operative banks to protect vast rural areas with virtually no banking. He alleged that from all over the country, there were widespread reports of distress among everyday people on account of the cash crunch.  

Nor was the financial crisis restricted to North Bengal.  Brick kilns in the state had also stopped production in many areas. A recent media report from Malda district revealed that the livelihood of nearly 25000 people of the Chanchal subdivision had been directly impacted because of no availability of cash.

This had caused a slowdown in construction activities in general and stalled work on the rural roads improvement projects. The annual turnover of brick-making work in 51 kilns in the subdivision was over Rs 200 crore. For making and packing 1000 bricks a day, each worker received Rs 550. But there is hardly any activity in the kilns today. Even as owners complained that labour was unavailable, they also admitted that the situation was difficult because daily payments could not be made. Both kiln owners, as well as workers, complained that the Central government should have anticipated the fallout of their decisions before implementing them.

Some brick kiln owners had managed to stay afloat by opting for different means. One of them said he had distributed Rs 2000 among workers one day, while another said he had distributed rice instead of making a cash payment, among workers. But all agreed that without an immediate and adequate supply of new notes from the Centre, it might not be possible to continue any economic activity at all.

(The views expressed are strictly personal.) 

Ashis Biswas

Ashis Biswas

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