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LATEST NEWS UPDATES | Demonetisation crushes green shoots in rural India -Rashmi Pratap

Demonetisation crushes green shoots in rural India -Rashmi Pratap

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published Published on Dec 5, 2016   modified Modified on Dec 5, 2016
-The Hindu Business Line

Rabi sowing down; sales of tractors and two-wheelers dip

Mumbai:
The demonetisation of high-value currency notes seems to have crushed the tender green shoots of economic recovery in rural India by choking off life-sustaining money supply and impeding the wheels of commerce from spinning.

From FMCG firms to two-wheelers to tractor makers, companies had been looking forward to an increase in rural demand in the wake of an adequate monsoon after two years of sub-normal rains. But just as things were beginning to look up, the withdrawal of Rs. 500 and Rs. 1,000 notes has hit rural India hard.

Unlike metros, rural areas do not have adequate numbers of ATMs or digital payment options. Given the cash dependence, and the fact that even small-denomination notes are not in active circulation, the demand recovery in rural areas has been badly affected.

“The agriculture sector will bear the brunt of demonetisation,” said Dharmakirti Joshi, Crisil Chief Economist. “Farmers are finding it tough to sell their produce in the APMC markets. Therefore, despite a good harvest, there is unlikely to be a commensurate improvement in rural demand.”

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The Hindu Business Line, 4 December, 2016, http://www.thehindubusinessline.com/economy/economy/article9410361.ece?homepage=true


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