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Farmers have been left stranded as traders have no cash to pay
for their produce, while millions of Indians lined up outside
banks and post offices for the ninth day to exchange old
banknotes or withdraw rationed money from their accounts.
Modi dropped a bombshell on Nov. 8 by abolishing 500 and 1,000
rupee notes that accounted for 86 percent of cash in
circulation. The move was aimed at cracking down on the shadow
economy but has brought India's cash economy to a virtual
standstill.
In the latest in a series of ad hoc steps, Modi allowed farmers
to withdraw up to 25,000 rupees ($368) a week against their crop
loans to ensure that sowing of winter crops "takes place
properly", a senior finance ministry official said.
Economic Affairs Secretary Shaktikanta Das also said a time
limit for farmers to pay crop insurance premiums has been
extended by 15 days.
Many of India's 260 million farmers have no bank accounts and
depend on local money lenders to fund sowing, which means those
that have to borrow to sow winter crops like wheat or rapeseed
could face debt trouble without a good harvest.
The government also slashed the amount of old money people can
exchange for new notes to 2,000 rupees - or just under $30 -
from a limit of 4,500 rupees.
The move sought to deter huge numbers of people queuing to swap
cash repeatedly, some of whom are suspected to be acting on
behalf of racketeers trying to launder "black cash" before a
Dec. 30 deadline for depositing or swapping old notes.
($1 = 67.8875 Indian rupees)
(Reporting by Nidhi Verma and Neha Dasgupta; Writing by Krishna
N. Das; Editing by Douglas Busvine and Michael Perry)
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