What is necessary to avoid a debt trap in agriculture?
Answer and explanation
Correct answer: Understanding loan terms and preparing a timely repayment plan
A debt trap can arise when a farmer borrows without assessing interest, repayment period and the ability to pay instalments from farm income. Understanding loan conditions and making a timely repayment plan based on expected crop income helps keep borrowing manageable. Repeated, unplanned borrowing increases the risk of a debt trap. Exam tip: link prevention of a debt trap with financial planning, knowledge of interest rates and proper income-expense records.
Frequently asked questions
What is the correct answer to this question?
Understanding loan terms and preparing a timely repayment plan
Why is this the correct answer?
A debt trap can arise when a farmer borrows without assessing interest, repayment period and the ability to pay instalments from farm income. Understanding loan conditions and making a timely repayment plan based on expected crop income helps keep borrowing manageable. Repeated, unplanned borrowing increases the risk of a debt trap. Exam tip: link prevention of a debt trap with financial planning, knowledge of interest rates and proper income-expense records.
Which subject and chapter does this question cover?
This is a Class 11 Home Science question. Chapter: Work, Livelihood and Career. Topic: Traditional occupations in India - Agriculture.
