Question

Q.5 Read the following Case-studies and answer the question that
follow:
(A) Salim is a shoe manufacturer, received an order for 3,000 pairs
of shoes from a large trader. He obtains a loan to meet the
expenses and ultimately, he is able to deliver the order, make a
good profit and repay the money that he had borrowed.
(B) Swapna is a small farmer, taken loan from moneylender to meet
the expenses of cultivation. Unfortunately, due to lack of rain, the
crop was destroyed. She had to take another loan. In this way she
is caught in debt. She has to sell a part of the land to pay off the
debt.
(i) Why did Salim and Swapna need credit ?
(ii) What was the risk in the case of Salim? What was the outcome ?
(iii) What are thd reasons which made Swapna's situation so risky?
(iv) Define the term- Debt-Trap with another example.​

Answer 1

1 To repay the loan and to meet his needs.

2 Salim would not be able to finish the order on time. The outcome was he, in profit as he made all the pieces of shoes.

3 The rain which destroyed all the crops.

4  It is a situation in which a poor person falls in dept i.e he/she is not able to pay the interest rate or loans .

eg:- a lady/man takes loan from the village head and because she/he has to pay the hospital fee for her son/daughter she/he can't repay the loan and falls in a dept trap.

Answer 2

Answer:

The image below gives the answers to ur questions