Question

What are the sources of money in the village? Why do people go to moneylenders for finance?

Answer 1

Modern farming methods such as use of HYV insecticides pesticides etc require a great deal of capital so the farmer needs more money than before.   (i) The medium and large farmers have their own savings from farming. They are thus able to arrange for the capital needed.   (ii) In contrast, the small farmers have to borrow money to arrange for the capital. They borrow from large farmers or the village moneylenders or the traders who supply various inputs for cultivation.   (iii) The rate of interest on such loans is very high. They are put to great distress to repay the loan, which is not so in .the case of medium and large farmers.