Why in the News?

The Reserve Bank of India (RBI) survey on agricultural transactions reveals that cash remains the primary mode of payment among farmers, although digital payments are gradually increasing. Despite the rise of Unified Payments Interface (UPI) and mobile banking, over 70% of Indian farmers still rely on cash for selling their produce.

Key Findings of the RBI Survey

• In 2019, 88% of farmers used cash for transactions. By 2022, this figure dropped to 79% and further declined to 72% in 2024.
  • However, this transition is slow compared to other sectors of the economy.
• The share of farmers using electronic payments has increased from 8% in 2019 to 18% in 2024.
• Among traders, the adoption of digital payments has been faster, rising from 8% in 2019 to 31% in 2024.
• Among retailers, the usage of electronic payments increased from 3% in 2019 to 22% in 2024.

Reasons behind low Digital Adoption

• 55% of farmers rely on traders to determine market prices, up from 47% in 2019. 47% depend on fellow farmers, while fewer than 10% use apps or websites to check market rates.
  • Despite the growth of agri-tech platforms, most farmers still depend on word-of-mouth rather than digital sources for price information.
• Multiple intermediaries in the supply chain reduce farmers’ share in the final consumer price.
• 64% of farmers reported crop damage during the 2023-24 rabi season. Unseasonal rainfall was cited as the top reason (37%), followed by heatwaves (30%).
• As a result, 90% of farmers consider weather forecasts as the most important factor in crop-sowing/ harvesting decisions.

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