Question

Explain with two examples, two different credit situation one-positive and one-negative.

Answer 1

-A manufacturer taking credit during festive season in anticipation of increased demand for his product during the festival to expand his production costs and later that situation has worked in his favor,as it enabled manufacturer,the example mentioned in text book.
-A small farmer who has taken a credit for cultivation might face a problem.As crop production involves high costs on inputs life HYV of seeds,fertilizers,pesticides.Farmers generally take loans at the beginning of the season and repay after harvest.But the failure of the crop makes loan repayment impossible,which a times compel them to sell part of their land which worsen their situation.