Demonetisation: Indian government allows farmers to buy seeds with old Rs 500 notes

India's 263 million farmers mostly live in the cash economy, exposing them to the full impact of Prime Minister Narendra Modi's shock November 8 announcement that larger denomination bank notes would immediately cease to be legal tender. Photograph:( AFP )

WION New Delhi, Delhi, India Nov 21, 2016, 09.26 AM (IST)

The Indian government has allowed farmers to purchase seeds with old 500 rupee currency note from state-run outlets, national or state seeds companies and agricultural universities, a finance ministry statement said on Monday.

Prime Minister Narendra Modi's move to withdraw from circulation 500 and 1,000 rupee bills as legal tender has left millions of farmers with little cash to buy seeds and fertilisers for winter crops, Reuters reported.

It has also snowballed into an adverse effect on the production of key commodities and hurting rural communities just as it recovers two years of drought.

The government on Monday allowed farmers to purchase seeds with the demonetised bank notes of Rs 500 value.

"The government is committed to ensure that the farmers are suitably facilitated during the Rabi season," the official statement said.

(WION with inputs from agencies)