FinMin denies proposal to allow farmers buy seeds with old notes

The Finance Ministry rejected Agriculture Ministry's proposal to allow farmers to purchase seeds using demonetised currencies of Rs 500 and Rs 1,000 on the ground that the move may become a conduit to offload black money as deposits in Jan Dhan accounts witnessed significant surge over the past few days.

In his letter to Finance Minister Arun Jaitley, Minister of Agriculture and Farmers' Welfare Radha Mohan Singh on November 15 requested Jaitley that farmers be allowed to buy seeds worth Rs 10,000 per day using old currency notes until November 24 for Rabi crop.

On November 15, Singh wrote to Jaitley seeking exemptions available to airlines, railways, petrol pumps and hospitals for all government-run seed agencies to sell seeds for the Rabi crop until November 24.

To thwart illegal activities, Singh also suggested that selling agencies such as NSC, ICAR or state agriculture departments would collect self-attested photocopies of identity cards and other details if required. Another safeguard could be that no refund of money or return of seeds would be allowed for seeds purchased through old currency notes, he added.

At a meeting on Tuesday, the Department of Economic Affairs argued that since 16 crore Jan Dhan accounts were already active in the rural sector; these could be used by farmers to exchange currency or withdraw cash for buying seeds and fertilisers for the Rabi crop.

The Finance Ministry has allowed farmers to draw up to Rs 25,000 per week against crop loans.