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Question
A farmer borrows from a trader before cultivation and he is forced to sell his produce to the same trader at a very discounted price. After harvest, the farmer ends up paying the principal amount back with high interest and suffers a loss because of selling at a discounted price. What has the farmer gotten himself into?
A farmer borrows from a trader before cultivation and he is forced to sell his produce to the same trader at a very discounted price. After harvest, the farmer ends up paying the principal amount back with high interest and suffers a loss because of selling at a discounted price. What has the farmer gotten himself into?
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Solution
The correct option is A A debt trap
The farmer has landed in a debt trap because the interest is unreasonably high. Due to this, the farmer is left with no choice but to sell at a discounted price to the trader.
The farmer has landed in a debt trap because the interest is unreasonably high. Due to this, the farmer is left with no choice but to sell at a discounted price to the trader.
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