Why is cheap and affordable credit important for the country's development? Explain with any three reasons.
Answers
Credit means loans. It refers to a sort of agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future repayment.i. Cheap and affordable credit for poor households is essential for a country’s economic development and material growth. It is required for a variety of important economic activities such as big or small investments, setting up of businesses and buying of cars and houses.ii.In the rural hinterland, credit helps in the development of agriculture by helping farmers purchase seeds, fertilisers, pesticides and farming machinery.iii.Manufacturers require credit to sustain operational costs, for buying raw material and to purchase plant machineryand equipment.iv.Some people may also avail of credit to provide for marriage or illness.
Cheap and affordable credit is important for country's development as
1) It helps to meet the working capital needs of production which will increase PCI of country.
2) It helps in setting up new industries or business. It will help in globalization and compete with foreign countries.
3) Farmers can buy agriculture inputs with credit or set up small scale and cottage industry.