Read the following scenario and answer the questions:
Rampur is a semi-rural area where most people depend on farming. A group of farmers in Rampur has started growing arhar and chickpea in large quantities. However, they face several problems: they have no storage facility, they must sell immediately after harvest at low prices to local traders, and they have no access to cheap credit. The local administration is considering setting up a dal mill, a cold storage unit, and a rural bank branch in the area.
(i) How would setting up a dal mill benefit the farmers and the local economy of Rampur? (Give two points.)
(ii) How would a cold storage unit help these farmers overcome one of their major problems?
(iii) Why is access to cheap agricultural credit important for small farmers like those in Rampur?
Generated by claude-sonnet-4-6 · 2026-06-26 13:23 · grounding rag
Model Answer
(i) Benefits of a Dal Mill:
- Farmers growing arhar and chickpea can sell their produce to the dal mill directly, getting better prices instead of being forced to sell cheaply to local traders.
- It creates additional employment in the semi-rural area in processing and related services, boosting the local economy.
(ii) Cold Storage Unit:
Farmers currently have no storage facility and must sell immediately after harvest at low prices. A cold storage unit allows them to store their produce and sell when market prices are favourable, preventing distress sales and increasing their income.
(iii) Importance of Cheap Agricultural Credit:
Small farmers like those in Rampur cannot afford seeds, fertilisers, and equipment on their own. Without cheap credit, they borrow from moneylenders at very high interest rates, pushing them into debt. If a rural bank provides credit at reasonable interest rates, farmers can buy inputs on time, improve cultivation, and increase productivity.
Source: How to Create More Employment?, Chapter 2; How to Protect Workers in the Unorganised Sector?, Chapter 2
---
Explanation
- The examiner expects direct use of the scenario linked to textbook concepts — dal mills, cold storage, and cheap credit are all explicitly mentioned in Ch. 2's "How to Create More Employment?" section.
- For (i), give two distinct points — one on farmer income, one on local employment/economy.
- For (ii), link the cold storage specifically to the farmers' stated problem (no storage → forced distress selling).
- For (iii), the key chain is: poor farmer → can't afford inputs → moneylender → high interest → debt trap → bank credit breaks this cycle. Always mention "reasonable/low rate of interest."
- Do not write general definitions; keep answers scenario-specific as examiners reward application.