What is the importance of credit in rural areas (4m) - Economics - Unit III- Rural Development

Question

What is the importance of credit in rural areas??(4m)

Ishi · Accepted Answer

Dear Student
The importance of credit in rural areas is highlighted in the
following points:
1 Credit helps the farmers to commercialise their farming In
other words, commercial farming requires funds that are provided
via credit As the small and the marginal farmers produce only for
their subsistence, they fail to generate sufficient surplus to
reinvest on their lands leading to degradation of the land
2 Secondly, given the long gestation period between sowing and
harvesting of the crops, credit is extended to the farmers for
meeting their initial requirements of farm inputs like seeds,
fertilisers, etc
3 Credit saves the farmers from the vicious circle of poverty
The farmers require funds for meeting their general and specific
needs These needs are to be fulfilled via credit
4 Lastly, agriculture has always been dependent at the vagaries
of climate In the absence of good monsoon or crop failure, farmers
are worst hurt Thus, in order to save them from such tragedy, crop
insurance and farm credit plays a vital role

Regards