Answer:
(a)
Normally, small farmers have no collateral to pledge against loans. Since
farming is a high risk activity, banks are unwilling to lend to small farmers.
(b) Small farmers can take loans from cooperatives, SHGs (if they are
members) or informal sector credit sources like moneylenders, traders,
relatives, friends, etc.
(c) An example of unfavourable terms of credit is given
below Shiva is a small farmer who borrows money at the rate of 4% per month {i.e.,
48% per annum) from a local moneylender to grow his crop.
The crop fails due to a severe drought. As a result, Shiva
has to sell part of his land to repay the loan. Thus, his condition becomes
worse than before.
(d) Small farmers can get cheap credit from sources like regional
rural banks, agricultural cooperatives, SHGs, etc.
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