Question

Discuss the importance of credit in rural development.

Answer 1

The rural economy can grow only if it has adequate flow of finance. It is capital only which can ensure higher productivity in agriculture. Provision of rural credit enables a farmer to buy improved seeds, fertilisers, organic pesticides and equipments. All these inputs help him to increase his agricultural productivity and his income.

So, importance of credit in rural development can be perceived as a means to break the vicious circle of low capital, low productivity and low savings of the rural poor.