There is no "direct link" between demonetisation and the prices of agricultural commodities, the government said Friday.
"There is no direct link between demonetisation and the prices of agricultural commodities," Agriculture Minister Radha Mohan Singh said in Rajya Sabha, adding that the government took a number of steps to provide relief to farmers after the noteban.
Replying to supplementaries during the Question Hour, he said the selling prices are governed by market forces of demand and supply, quality of produce and seasonality.
Official data earlier this week has shown that wholesale inflation soared to a 39-month high of 6.55 per cent in February from 5.25 per cent in January, while retail inflation rose to 3.65 per cent due to rise in food and fuel prices from 3.17 per cent in the previous month.
Singh said the capping imposed on compensation to farmers under the Pradhan Mantri Fasal Bima Yojna (PMFBY) have been removed and farmers can now get compensation even 14 days after the crops are reaped, to help make the scheme attractive.
The Minister said the Centre has asked the state governments to cover more and more farmers under the PMFBY from the current levvel of 30 per cent.
"We want to take it to 40 to 50 per cent of farmers in the country and we should together with state governments work towards achieving the target and popularise the PMFBY to help cover all farmers and give them protection of their crops," he said in the House.
Singh said the government has taken several relief measures for farmers after demonetisation including provision of additional grace period of 60 days for prompt repayment incentive to such farmers who took crop loans.
He also said the government granted interest waiver for two months for all short-term crop loans availed from cooperative banks and an additional resource of Rs.660.50 crore was made available during current financial year.
He also said the government allowed farmers to use old notes of Rs.500 and Rs.1,000 for making payments for purchase of seeds and fertilisers, besides organising training camps for using digital payments and extension of cut-off date for submission of premium proposal for cash crops under Pradhan Mantri Fasal Bima Yojna.
Besides, the Minister said, the RBI and commercial banks were advised to make the required cash available to district central cooperative banks to ensure quick flow of credit and required cash to farmers during the current Rabi season and prioritise the availability of adequate legal currency to meet their cash requirement.
States were also advised to ensure ready availability of fertilisers at their level to the farmers.