Chapter 3

NCERT
Class 10
Economics
Solutions
11. In India, about 80 per cent of farmers are small farmers, who need credit for cultivation.

Question:

In India, about 80 per cent of farmers are small farmers, who need creditfor cultivation.

(A) Why might banks be unwilling to lend to small farmers?

(B) What are the other sources from which the small farmers can borrow?

(C) Explain with an example how the terms of credit can be unfavourable for the small farmer.

(D) Suggest some ways by which small farmers can get cheap credit.

Answer:

(A) Banks hesitate to give loans to small farmers because they do not have any assets to pledge, and some of them are not in a position to repay the loan in time. Apart from this, some farmers are already in the clutches of debt, that's why banks are not ready to give them additional loans.

(B) Moneylenders, employers, self-help groups and landlords etc. are other sources from which small farmers can take loans.

(C) Let's understand from an example, if a person takes a loan from a landlord by mortgaging his land and is unable to pay the loan till the time expires, then in this case the landlord can get the loan amount paid by selling his land.

(D) Cheap loans can be made available to small farmers by self-help groups and banks. Because the loan obtained from them is at a lower interest rate than other sources, which can be easily repaid in 3 or 4 years.

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