Question

Given below are two statements:
Statement (I) : Indian farmers borrow credit from institutional and non-institutional agencies.
Statement (II) : The borrowing of credit from non-institutional agencies is higher than the institutional agencies.
In light of the above statements, choose the most appropriate answer from the options given below:

• A. Both Statement (I) and Statement (II) are true.
• B. Both Statement (I) and Statement (II) are false.
• C. Statement (I) is true but Statement (II) is false.
• D. Statement (I) is false but Statement (II) is true.

Hint:

Government financial inclusion programs have significantly shifted the share of rural credit from informal moneylenders to formal banking institutions.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
Agricultural credit in India is divided into institutional sources (banks, cooperatives, RRBs) and non-institutional sources (moneylenders, landlords, traders).
Detailed Explanation:
Let us evaluate both statements:
- Statement (I) analysis: Indian farmers access credit from both institutional channels (commercial banks, cooperatives, RRBs) and non-institutional channels (money lenders, friends, and family). Thus, Statement (I) is true.
- Statement (II) analysis: Historically, non-institutional sources dominated agricultural lending. However, following the expansion of bank networks, RRBs, and the introduction of the Kisan Credit Card (KCC) scheme, institutional sources now account for over 60% to 70% of total agricultural credit. Therefore, institutional borrowing is higher than non-institutional borrowing, making Statement (II) false.

Step 2: Final Answer:
Since Statement (I) is true and Statement (II) is false, the correct choice is Option (C).