The Green Revolution was a harbinger of major changes in the credit system. What change did it bring?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → It diversified the portfolio of rural credit towards production-oriented lending
After the Green Revolution, rural loans moved towards production: loans for farming itself, such as seeds, fertilisers and implements.
Option (1) It diversified the portfolio of rural credit towards production-oriented lending — Correct. This is the change it brought.
Option (2) It shifted rural credit mainly towards consumption loans — Incorrect. The shift was towards production. Consumption borrowing is a complaint made about SHG loans.
Option (3) It made moneylenders the main source of rural credit — Incorrect. Moneylenders were the main lenders before social banking.
Option (4) It removed the need for collateral in formal credit — Incorrect. Formal credit still needs collateral, which keeps the poor out.
NCERT (2026-27): “5.3 Credit and Marketing in Rural Areas … Later, the National Bank for Agriculture and Rural Development (NABARD) was set up in 1982 as an apex body to coordinate the activities of all institutions involved in the rural financing system. The Green Revolution was a harbinger of major changes in the credit system as it led to the diversification of the portfolio of rural credit towards production-oriented lending. The institutional structure of rural banking today consists of a set of multi-agency institutions, namely, commercial banks, regional rural banks (RRBs), cooperatives and land development banks. They are expected to dispense adequate credit at cheaper rates. Recently, Self-Help Groups (henceforth SHGs) have emerged to fill the gap in the formal credit system because the formal credit delivery mechanism has not only proven inadequate but has also not been fully integrated into the overall rural social and community development. Since some kind of collateral is required, vast proportion of poor rural households were automatically out of the credit network. …” |