why are the small farmers caught in dept?

Asked by sbidipak | 4th Jul, 2017, 10:00: AM

Expert Answer:

Small farmers have no capital and have to arrange for capital by taking loans from large famers on a very high interest rate. In addition, the banks do not provide them with loans because they lack proper documents and collaterals such as house, livestock or nay other property to guarantee to obtain a loan.

So the repayment of loan is crucially dependent on the income from farming. If there is failure in crop production then the repayment of the loan will become impossible. Hence, the small farmers have to sell part of the land to repay the loan. Credit instead of helping the small farmers made the situation still more worst and pushed the borrower into debt trap.

Answered by Tharageswari S | 4th Jul, 2017, 11:49: AM

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