Question

Why is cheap and affordable credit important for the country’s development? Explain any three reasons.

Answer 1

(i) People will earn more income when cheap and affordable credit will be provided to them that will promote them to invest more in their work.

(ii) People would be able to avail loan for a variety of needs. It will protect them from being exploited by informal sector.

(iii) As people get the cheap credit, they will invest more in agriculture, business and small scale industries which will enhance the country's GDP.

(iv) More investment will automatically accelerate the economic development of a country.

(v) Cheap credit will protect them from debt-trap and they will be able to contribute in economic development of the country.

Answer 2

Cheap and affordable credit is crucial for a country’s development because: 

• More lending would lead to higher incomes and encourage people to invest in agriculture, engage in business and set up small industries. 
• Cheap credit will enable more investment. This leads to acceleration of economic activity. 
• Cheap credit would also allow weaker sections of society to access formal sector of lending and get rid of from informal moneylenders. 
• Affordable credit would also end the cycle of debt trap. 
• Cheap and easy terms of credit would inspire better investment in technology and thus increase competition.