Question : Statement 1: Institutional sources of credit include banks, cooperatives, and government programs.
Statement 2: These institutions provide credit to farmers at high-interest rates.
Option 1: Both statement 1 and statement 2 are true.
Option 2: Both statement 1 and statement 2 are false.
Option 3: Statement 1 is true, but statement 2 is false.
Option 4: Statement 1 is false, but statement 2 is true.
Correct Answer: Statement 1 is true, but statement 2 is false.
Solution : The correct answer is (c) Statement 1 is true, but statement 2 is false.
Statement 1 is true. Institutional sources of credit refer to formal financial institutions that provide credit facilities to farmers and agricultural enterprises. Examples of institutional sources of credit include commercial banks, agricultural cooperatives, and government-sponsored programs aimed at supporting agricultural activities.
Statement 2 is false. While interest rates can vary depending on factors such as loan terms, risk assessment, and market conditions, it is not accurate to claim that institutional sources of credit always provide credit at high-interest rates. In fact, one of the objectives of institutional credit is to provide affordable and accessible credit facilities to farmers. In many cases, these institutions offer competitive interest rates, especially when supported by government schemes or subsidies aimed at promoting agricultural development and rural livelihoods.
Therefore, statement 1 is true, but statement 2 is false.
