capital is a basic need in agriculture how it is arranged by Indian farmer ? explain
Answers
Modern farming method such as hybrid seeds, insecticides, chemical fertilizers etc require a great deal of capital. So, the farmers need more money than before. Money can be arranged by the farmers by the following ways.
1) The medium and large farmers have their own savings from farming business which they usually deposit in the banks. They use this surplus money whenever they are in need of it.
2) While most of the small farmers borrow money for their requirement of capital. They borrow money from the large farmers or money lenders within the village. Small farmers purchase various raw materials for cultivation of land on credit from the traders within the village. The money lenders charge a high rate of interest on the amount borrowed.
3) In India agricultural credit are being advanced by different sources. The short term and medium term loan requirements of Indian farmers are mostly met by co-operative societies, moneylenders and government. But the long term loan requirements of the Indian farmers are met by land development banks and government. Various commercial banks like SBI, PNB, Bank of Baroda, Allahabad Bank, Oriental Bank of Commerce etc provide loans to the farmers. The Regional Rural Banks were established in 1975 for supplementing the commercial banks and co-operatives in providing rural credit. Since 1975, these Regional Rural Banks are advancing direct loans to small and marginal farmers and agricultural labourers.
Indian farmers borrow money from the banks in order to have their crops grown.
Other than that if the farmers who do not borrow money from the banks they borrow money from the traders or the moneylenders because it is difficult for them to repay and since they are small farmers.
And the farmers who are medium in the rank and have some savings they run their farms with their own money and manage all the expenses themselves.