Question

Repayment of the loan is crucially dependent on the income from farming. Explain.

Answer 1

Repayment of Loans given to farmers is primarily dependent on good monsoons and the consequent harvest of crops of various kinds. In other words, farmers can continue repayment without defaults only if their earning from farming is healthy, as estimated by the lender. Sometimes, we hear of defaults by farmers; this happens when the income is insufficient from farming.