Solution

The two necessary conditions for rural development are money and credit. The low income that results in a low savings rate is a common problem in rural regions. Investment in farmland can boost production, but farmers find this to be exceedingly challenging. The expansion of the agricultural sector and subsequent development of the rural economy depend heavily on the inflow of credit. The following examples emphasize the role of credit in rural development:

1. Credit aids farmers in commercialising their agribusiness. In other words, financing for commercial farming must be obtained through credit. Because small and marginal farmers only produce enough food for themselves, they are unable to create enough surplus to reinvest in their holdings, which causes the land to deteriorate.

2. The farmers are granted credit for meeting their early needs for farm inputs like seeds, fertilisers, etc. given the lengthy gestation time between sowing and harvesting the crops.

3. The farmers who use credit are rescued from the poverty cycle. Farmers need money to address both their general and unique demands. Credit will be used to meet these requirements.