Question

3. Describe the pattern of formal and informal sources of credit in urban areas. Why do we need to expand formal sources of credit? Give any three reasons.

Answer 1

In the broadest sense, economic development might be viewed as “any growth in real income per capita from whatever source”. Bach has described it as “growth in the total output of goods and services in the economy”. Novack has referred to a very old definition of economic growth, according to which it is “con­tinuous substantial increase in per capita consumption of goods and services”.

The substantial consumption of economic goods is possible only when there is substantial production of economic goods, and sub­stantial production these days depends upon greater use of technologies. In a narrower sense, therefore, it may be said that economic development refers to “the extensive application of inanimate power and other tech­nologies to the production and distribution of economic goods”.

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In this sense, economic development is practically equivalent to industrialisation. But to say that economic development is only indus­trialisation would not be correct because besides involving the use of power and technology in production, it also involves labour mobility, ex­tensive educational system, and so on.

Jaffe and Stewart (1951), who described economic development as “rationalization of economic production”, have given a dichotomy of de­veloped and underdeveloped countries on the basis of per capita income and factors like high literacy, high expectation of life at birth and low fertility, low proportion of labour force engaged in agriculture, and high production of kilowatts of electricity per capita.

Answer 2

Answer:

hope it helps:;

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FORMAL SECTOR

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•We can get formal sector credit loans from Bank, LIC etc

•They are under the control of RBI

•If we don't pay the loan back the take legal action

•They give loan in reasonable interest

•Collateral is necessary

•This take more time for process

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INFORMAL SECTOR

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•We can get informal sector credit loans from Money lender, Trader, relatives etc

•They are not under the control of RBI

•If we don't pay back the loan they may take illegal action

•They give loan in high interest

•Collateral is not necessary ,it depends on the people's will and wish

•They actually don't take more time for the process

.___________________.

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