The initial report was instantly "hailed" as the "official acknowledgement of the adverse impact of note ban on the millions in the agriculture sector" by the Congress. (Photo: Reuters)

The ministry of agriculture has taken a U-turn on its assessment of the impact of demonetisation on the agriculture sector presented to a parliamentary panel last week.

Exactly one week ago, the ministry, according to sources, had blamed the demonetisation announced by Prime Narendra Minister Modi for millions of farmers in India failing to buy seeds and fertilisers for their winter crops in a report submitted to the Parliamentary Standing Committee on Finance.

The members of the committee belonging to the Bharatiya Janata Party (BJP) had protested against the report, claiming that the report was "not proper" as it "wasn't duly endorsed by the agriculture secretary". The committee is led by Congress leader M Veerappa Moily.

The report was instantly "hailed" as the "official acknowledgement of the adverse impact of note ban on the millions in the agriculture sector" by Moily on Twitter.

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But now, the ministry is set to submit a fresh report in the meeting of the standing committee on Tuesday in which the RBI governor will be deposing.

India Today TV has accessed the draft of the report which the ministry will present before the standing committee. The note titled "Background Note for Examination of the Subject 'Demonetisation of Indian Currency Notes of Rs 500 and Rs 1,000 and Ramifications thereof'", in its conclusion, says: "There has been an encouraging growth witnessed inflow of agriculture credit, distribution of quality/certified seeds, coverage of major Rabi crops and crop production in comparison to previous years. This indicates that the measures taken by the government ensured no adverse impact [of demonetisation] on the agriculture sector."

It further says demonetisation "brought more formalisation in the agriculture sector" and it was "beneficial to farmers".

OLD REPORT VS NEW REPORT

The conclusion is in stark contrast to the earlier note submitted by the same ministry. The earlier note had indicated that "demonetisation came at a time when farmers were in the midst of selling their Kharif crops and sowing the Rabi crops. Demonetisation removed cash from the market while the sale and sowing operations needed huge amounts of it."

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Members of the opposition in the committee told India Today TV that the first note had said that "millions of farmers, unable to get cash, couldn't buy seeds and fertilisers for their winter crops. Landowners failed to pay daily wages or purchase what they needed for crops."

The report indicated that despite delayed relaxation announced by the government in form of allowing the use of banned Rs 500 and Rs 1,000 notes for purchase of wheat seeds, the National Seeds Corporation's (NSC) sale of wheat seeds fell short by nearly 1.3 lakh quintals.

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Sources say that the report generated tremendous heat in the standing committee meeting last week and its irate members refused to listen to the team of agriculture ministry officials as the secretary of the ministry did not show up to make a presentation in the meet.

The ministry used the one-week period to remove the bits that criticised the note ban exercise and had caused embarrassment to the government. The report now says:

The Central government in consultations with state governments undertook steps to ensure agriculture sector remains unaffected, grows with desired pace and farmers are able to obtain necessary inputs like credit, seeds and fertiliser.

There was no impact of demonetisation on seeds sold, area covered by agriculture and crop production.

Agricultural performance -- the total area under cultivation in 2015-16 (pre-note ban year) was 612.28 lakh hectares. In 2016-17, it was 635.29 lakh hectare and 628.25 lakh hectare in 2017-18.

Total crop production -- in 2015-16 was 1264.5 lakh tonnes. In 2016-17, 1367.75 lakh tonnes and 1441.12 lakh tonnes in 2017-18.

The sale of wheat seeds was not impacted by note ban as farmers allowed to pay using Rs 500 and Rs 1,000 banned notes with proof of identity. Wheat seed sale in 2015-16 was 95.63 lakh quintals. In 2016-17, 124.87 lakh quintal and 139.30 lakh quintal in 2017-18.

There was no impact of demonetisation on arrival of paddy, cotton, onion and soya to markets between September and December 2016.

No impact of demonetisation on crop prices.

Paddy and cotton prices in September-December 2016 were similar to the previous year. Both crops remained under MSP and payments were made digitally. Onion and soybean prices subdued due to higher production and arrival in markets.

Fertilisers provided on credit to farmers, all modes of payment (credit/debit cards/cheques) accepted. Fertiliser suppliers asked to extend the credit period by a month.

No impact on cash availability. Farmers were allowed to withdraw Rs 25,000 per week from KYC compliant accounts. Farmers receiving payments through cheque/RTGS allowed transaction of Rs 25,000 per week. Traders allowed Rs 50,000 per week to pay wages and loading-unloading charges.

Loan repayment terms relaxed post note ban. Prompt payment incentivised at 3 per cent. Interest waiver of 2 months. A special line of credit through Kisan credit cards.

With this, Agriculture Minister Radha Mohan Singh, whose handling of the sector which directly and indirectly employs crores in the country, has tried to undo the damage his ministry's earlier note submitted to the standing committee had done.

On Friday, Singh, facing fire over the "candid admission" which seriously punctured the government's "zero impact of note ban" claim, had tried course correction by rubbishing reports that demonetisation prevented farmers from purchasing seeds.

He said, "There was no ban on the use of scrapped currency to buy seeds. Statistics show that purchase of seeds increased after demonetisation, compared to the previous year."

Opposition members in the standing committee are, on their part, planning to target the agriculture ministry for completely altering its assessment of the impact of demonetisation. They plan to reject the report like the BJP MPs had done to the original note.

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