Describing Uttarakhand as a small state suffering from resource crunch, Chief Minister Harish Rawat on Saturday asked the Centre to take necessary steps to help the state deal with the adverse effects of demonetisation on tourism and agriculture.
In a letter to Union Finance Minister Arun Jaitley, he said demonetisation could be a good step so far as black money was concerned but adequate preparatory measures should have been taken prior to the move.
“Sudden demonetisation of high value currency notes of Rs 500 and Rs 1000 without adequate preparatory steps has adversely impacted agriculture, tourism and overall revenue generation in a small state like Uttarakhand.
“Demonetisation is weighing heavy on a state already battling the losses caused by the recommendations of the 14th Finance Commission,” Rawat said.
Noting that a vast majority of people living in remote hill areas of the state depended on the cooperative banking system, he said exclusion of cooperative banks from any transactions (deposits and exchange) of the banned notes had put the rural populace, dependent on agriculture, in a tight spot as the sowing season was already underway and they had no cash to buy seeds and fertilisers.
Noting that the current crisis might result in failure of rabi crop and subsequent rise in foodgrain prices, Rawat asked the Union Minister to allow cooperative banks to accept deposits of banned Rs 500 and Rs 1000 notes.
Paucity of cash has led to a drop in sale, exchange of goods and services and affected tourism in general. It has had a negative impact on the state government’s sources of income, including VAT collections, he said.
Also noting that demonetisation will lead to a rise in the Centre’s earnings through collection of direct and indirect taxes, the Chief Minister said the benefits should be shared with the states.