question_answer 2)

Discuss the importance of credit in rural development.

Answer:

Rural development focuses on increasing productivity in rural areas. To realise higher productivity, capital needs to be infused in the rural economy from time to time. Credit plays an important role in rural development as discussed below (i) Credit is needed by fanners to meet the initial Investment on seeds, fertilisers, implements, etc till the crop is ready. (ii) Credit in also required for other family expenses of marriage, death, religious ceremonies etc so that the farmers arc saved from moneylenders rind traders who exploit them by charging high interest rates and by manipulating the accounts to keep them in a debt-trap. (iii) Credit facilities are needed by farmers to upgrade the technologies and mechanised farming so that the marketable surplus can be increased. (iv) In case of monsoon failure, crop yield is low and farmers need to be shielded against this loss by providing credit and insurance, Keeping the above points in view, major nationalisation of banks was done in 1969, as India adopted social banking and multiagency approach to adequately meet the needs of rural credit. Later, the National Bank for Agriculture and Rural Development (NABARD) was set up in 1982, as an apex body to co-ordinate the activities of all institutions involved in the rural financing system.