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LATEST NEWS UPDATES | Demonetisation has left India's food markets frozen - and the future looks tense -M Rajshekhar & Abhishek Dey

Demonetisation has left India's food markets frozen - and the future looks tense -M Rajshekhar & Abhishek Dey

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published Published on Nov 19, 2016   modified Modified on Nov 19, 2016
-Scroll.in

The liquidity crisis has affected both the trade in food and the planting of the winter crop.

As demonetisation enters its second week, traders in Patna’s Maroofganj mandi are seeing something unprecedented.

In the last seven days, the supply of new stocks in this wholesale market, which supplies cooking oil, spices, rice, wheat and pulses to shopkeepers across Patna, has plummeted. The supply of cooking oil, for instance, is down by 80%.

Talk to traders selling spices, grains or pulses and you hear similar numbers. “Do you see how quiet this market is?” said an accountant at a rice shop. “Till 10 days ago, you would not have been able to walk down this street.”

In the same period, orders from shopkeepers have fallen steeply as well. Most of them cannot buy as much stock as before, said Abhijit Kumar, who runs a wholesale shop for spices, because they have only Rs 500 and Rs 1,000 notes – both derecognised as legal tender by the government.

The strange thing is: despite the contraction in both supply and demand, commodity prices are stable.

Himanshu Kumar, a wholesale trader in cooking oil, said prices have not changed in the last one week. In rice and dal, said Vikas Kumar, a rice merchant who was overseeing the loading of sacks onto cycle rickshaws when this reporter met him, “demand is 80% down”. But prices, he said, have not changed.

Travel down to the fruit and vegetable market near Gandhi Maidan in Patna, and you will see something similar.

One of the biggest fruit and vegetable markets in Bihar’s capital, it occupies a handful of streets between the south bank of the river Ganga and a busy thoroughfare which runs east, heading out of Patna. This mandi gets its fruits and vegetables in multiple ways – traders travel to nearby villages early in the morning to buy vegetables which they later sell at the mandi, others go to a nearby wholesale market locally known as the Bazaar Samiti, and yet others get their vegetables from the wholesale market at Mithapur, near the train station.

Here too, volumes are down. Arrivals have fallen by half, said Sachidanand Singh, a wholesaler who supplies to vegetable sellers in this mandi.

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Scroll.in, 18 November, 2016, http://scroll.in/article/821834/demonetisation-has-left-indias-food-markets-frozen-and-the-future-looks-tense


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