The Agriculture Ministry, in a U-turn, said demonetisation was beneficial for the farm sector

Days after the Agriculture Ministry reportedly concluded that the overnight notes ban in November 2016 led to a cash crunch and hurt millions of farmers across the country, it has now come up with a new assessment that says exactly the opposite.

In a revised background note to the Standing Committee on Finance, the ministry said demonetisation was beneficial for the farm sector and blamed the earlier confusion over "mistake in compilation of data", people with direct knowledge of the matter said.

The ministry's new note says the shock treatment by the Prime Minister Narendra Modi government, in fact, boosted the sale of seeds and fertilisers and expanded the area of crops sown during the 2016 Rabi or winter crop season.

In the previous background note, the Agriculture Ministry reportedly concluded that the demonetisation exercise by PM Modi, which suddenly withdrew currency notes worth over Rs 15 lakh crore from circulation, led to a severe cash crunch in the farm sector. As a result, farmers could not buy seeds and fertilisers during the winter crop season in 2016, the ministry reportedly told a group of parliamentarians recently.

The standing committee on finance will meet the ministry's officials to discuss the impact of the notes ban on the farm sector, people familiar with the matter said.

On November 21, Agriculture Minister Radha Mohan Singh denied reports that his ministry had said that the notes ban had hit millions of farmers in the country. "Certain media channels and newspapers have been running a story that the agriculture ministry has accepted that farmers have been adversely affected by demonetisation and were unable to purchase seeds due to unavailability of cash. This is far from truth," Mr Singh tweeted, along with a clarification.

The official admission on demonetisation's impact emerged on a day PM Modi said on the campaign trail in Madhya Pradesh that he had used "bitter medicine" to bring back money into the banking system and to give "proper treatment to deep-rooted corruption" in the country.

Former prime minister Dr Manmohan Singh did not comment on the report as he is a member of the panel, but said: "The Modi government has to answer for the farmers' misfortune."