Question

How does availability of institutional credit impact the level of poverty in India?

Answer 1

The availability of institutional credit has impact on the below poverty level in India. Poverty is one of the major issues of India.

Though India is considered one of the fastest growing economies of the world, its growth rate was 7.11% in the year of 2015.

The institutional credit plays a significant role in development of agriculture in India.

The persistence of the money lenders in rural market is a major issue of concern.

Answer 2

Analysis indicates that poor peasants at best can offer an entitlement set as a mortgage, comprised only of future shares of their harvest, which itself is subject to risk. Consequently, lenders can not advance loans without risking extensive loss of loanable funds. As the landlords' income is subject to the same risk as that of peasants, they advance loans to ensure that their own income is not affected by the peasants' financial situation. An extension of institutional credit to peasants results only in subsidization of landlords.

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