The helpless Indian farmer: How demonetisation brought MP farmers onto streets

Traders rued their burnt shops, farmers mourned the death of their sons to police bullets; but as four days of violence drew to a close, both sides could only speak of one thing: demonetisation.

"Notebandi destroyed the trust between farmer and trader," said Sunil Ghatiya, a soybean trader in Mandsaur's Pipliya Mandi, "It finished off our market."

"The traders exploited us," said Dinesh Patidar, whose son Abhishek was killed when police opened fire on farmers demanding loan waivers and better prices for their crops, "They knew the farmers were desperate for cash." The Modi government insists the economy has weathered the shock of demonetisation of 86% of India's currency on 8 November last year, even as evidence to the contrary piles up and economists say they lack the tools to isolate its effects.

In Mandsaur, where four days of rioting resulted in the deaths of five farmers and the destruction of crops, farms, shops, and trucks, the policy's effects are visible: demonetisation has disrupted every aspect of the rural economy – land markets, credit networks, procurement, and crop prices. "A farmer sells when he needs cash immediately – for a wedding, a funeral, to pay a loan," said Madan Lal Viswakarma, "But after notebandi, traders at the government-run markets only pay by cheque."

The cheques take 20 days to clear, Madan Lal said, and then the banks have no currency to give. "If you want cash, the traders beat down your price, and charge two rupees on every hundred they pay," he said.