Question

Why do farmers require capital? How do farmers in Palampur arrange the required capital for farming?

Answer 1

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Capital is one of the most important inputs in the process of production. 
Capital are the inputs required at every stage of production. 
There are two types of Capital : - 
1) Fixed capital - All the inputs that can be used multiple times by the farmer. Eg -  Tractor, plough, turbines and all kind of machinery used in farming. 
2) Working Capital - All the inputs that remains with the farmer for a certain period of time are known as Working Capital. Eg - money in hand, seeds etc. 

Small farmers in Palampur arrange capital for then by taking loans from money lenders. Medium and Large farmers make more profit and arrange for capital with their profit. 
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Answer 2

Answer: Most small farmers borrow for the requirements of capital.They borrow money from large farmers and traders that they supply various raw materials for cultivation of land and money lenders within the village. These money lenders charge a high rate interest on the amount borrowed.

Explanation: l hope it will help you!

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