In India, about 80 percent of farmers are small farmers who need credit for cultivation.

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Detailed Solution

The above statement is true.
In India, small farmers need credit the most. But the banks are unwilling to provide them with loans due to the unpredictable nature of their occupation. Small farmers can lose their crops due to uncertain weather, which leads to non-repayment of their debt. Farmers also find it challenging to complete the documentation process as they are illiterate and fail to provide collateral against their loans. Thus, they look for money lenders for loans. They can also avail of cheap loans from cooperative societies under favourable conditions. The process of accessing loans from formal sources of credit is complicated, so farmers are likely to take loans from other sources of credit. Thus, there is a need to expand traditional sources of credit.

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