Question

Give two examples of how greater financial inclusion might benefit a small farmer who previously did not have access to modern finance.

Answer 1

Example 1: Greater financial inclusion can enable a farmer to get access to formal credit which at a lower interest rate. It helps him procure various materials needed for farming and that too at a lower cost because of the lower interest rates in the formal credit system as compared to information credit.

Example 2: Greater financial inclusion can help a farmer deal with contingencies such as crop failure more effectively through financial tools such as crop insurance.