Question

how does credit play a vital and positive role as well as a push the borrower into a situation from which recovery is very painful

Answer 1

Credit is useful because

1) It helps to meet the working capital needs of production.

2) It helps in setting up new industries or business.

3) Farmers can buy agriculture inputs with credit or set up small scale and cottage industry.

But, it is harmful also depends on the risk involved

1) Credit pushes the borrower into a debt trap in the case of high risks.

2) Instead of improvements in earning, the borrower is much worse of than before. For eg, farmers have to sell pay off land to repay the loan

From the above points it's concluded that credit is useful as well as harmful.

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