“Whether credit would be useful or wet, it depends on the situations”. Give two different examples in support of this statement. -SST 10th

“Whether credit would be useful or wet, it depends on the situations”. Give two different examples in support of this statement. -SST 10th
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1 Answer

Answer :

We can give examples of Salim and Swapna in support of this statement. (i) Salim is a shoe manufacturer. He obtains credit to meet the working capital needs of production. The credit helps him to meet the ongoing expenses of production, complete production on time and thereby increase his earnings.Credit, plays a vital and positive role in this situation. (ii) Swapna is a small farmer and grows groundnuts in her three acres of land.She takes a loan from the moneylender to meet the expenses of cultivation,hoping that her harvest would help repay the loan. But the failure of crops makes loan repayment impossible. She has to sell a portion of her land to repay the loan. Credit, instead of helping Swapna improve her earnings,leaves her worse off. She falls into a debt trap.
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