Q. 144.3( 8 Votes )
“Cheap and affordable credit is essential for poor households both in rural and urban areas.” In the light of the above statement explain the social and economic values attached to it.[CBSE 2013]
OR
Why is cheap and affordable credit important for the country’s development? Explain
any three reasons.[CBSE 2018]
Answer :
Cheap and affordable credit is essential for poor households:
1. The informal sector lends at a high-interest rate in rural areas so the cost for the borrower is much more.
2. When the cost of borrowing of more, large portion of income goes in repaying loans rather than investing it.
3. Often it leads to debt trap where the amount to be repaid is more than the borrower’s income and he has to borrow more.
Explanation: Without the benefits of the formal sector, rural households have no option other than going to informal lenders who only exploit them.
Rate this question :
Becoming a bilionaire -learning fundamentals of money48 mins
A Letter to God50 mins
Champ Quiz | Electrical Power and Heating31 mins
Surface Area and Volume49 mins
Metaphor and Simile41 mins
Foundation | Sequence and Series47 mins
Puzzles and Riddles41 mins
Consistent and Inconsistent Equations33 mins
Verb & Tenses46 mins
Electronic Configuration and Valency47 mins
Why do you think that the share of formal sector credit is higher for the richer households compared to the poorer households?
Together With Social ScienceShould there be a supervisor, such as the Reserve Bank of India, that look into the loan activities of informal lenders? Why would its task be quite difficult?
Together With Social ScienceWhy is there a great need to expand formal sector credit in India? Explain any three reasons.
Together With Social ScienceMention the characteristic of the formal and informal sources of credit in India.
Together With Social Science