Question

Problems of rural credit in india and its measures

Answer 1

Answer:

Agricultural Credit:

An average Indian farmer, who has to work on an uneconomic holding’, using traditional methods of cultivation and being exposed to the risks of a poor agricultural season is almost always in debt. He is a perennial debtor.

Once the farmer falls into debt due to crop failure or low prices of crops or malpractices of moneylenders he can never come out of it. In fact, large part of the liabilities of farmers is ‘ancestral debt’. Thus, along with his landed property, he passes on his debt to the next generation.

There are four main causes of rural indebted­ness in India:

(i) low earning power of the bor­rower,

(ii) use of loan for unproductive purposes,

(iii) very high rate of interest charged by the vil­lage moneylender.

(iv) the manipulation of accounts by the lenders.

In a few cases, the bad habits of the farmers (such as gambling, drinking, etc.) are responsible for his burden of ‘unproductive’ debt. However, in most cases, the cause of the debt may be some expensive social ceremony which the farmer was perhaps forced to “arrange for fear of a social boy­cott”.

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