CBSE - IX - Economics - The Story of Village Palampur
how do medium and large farmers arrange for the capital?what do they do with the surplus?
Most small farmers borrow money for the requirement of capital. They borrow money from large farmers or traders that they supply various raw materials for cultivation of land or moneylenders within the village. These moneylenders charge a high rate of interest on the amount borrowed. On the other hand, medium and large farmers are able to manage the required capital with their own savings from farming.
The farmers use the surplus as capital for the next harvest. Small farmers such as Gobind’s son and Savita are poor and have little surplus wheat. They kept most of the share for their own family needs. Big farmers such as Tejpal Singh have a surplus and sell the surplus wheat in the market. A part of their earnings is saved in the bank and used for buying farm machines.
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