Economics
Answer
Credit plays a crucial role in a country’s development:
- Credit allows businesses to invest in new technologies, expand operations, and increase productivity. This leads to higher output, job creation, and economic growth.
- Access to credit enables entrepreneurs to start new ventures, fostering innovation and competition.
- Credit is used to finance large infrastructure projects such as roads, schools, and hospitals. These projects improve public services and contribute to long-term economic growth.
- Farmers can use credit to purchase seeds, equipment, and technology, leading to higher yields and more efficient agricultural practices.
- Credit enables families to invest in education, healthcare, and housing, improving their quality of life and economic potential.
Related Questions
What are the reasons why the banks might not be willing to lend to certain borrowers?
In what ways does the Reserve Bank of India supervise the functioning of banks? Why is this necessary?
Manav needs a loan to set up a small business. On what basis will Manav decide whether to borrow from the bank or the moneylender? Discuss.
In India, about 80 per cent of farmers are small farmers, who need credit for 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.