Final answer:
India needs to expand formal sources of credit for financial inclusion, reducing dependence on informal credit, and encouraging entrepreneurship.
Step-by-step explanation:
Expanding Formal Sources of Credit in India
India needs to expand formal sources of credit for several reasons:
- Financial Inclusion: Expanding formal credit sources helps in achieving financial inclusion, ensuring that all individuals have access to affordable financial services. By making credit accessible to a wider population, it promotes economic growth and reduces income inequality.
- Reducing Dependence on Informal Credit: Expanding formal credit sources can help reduce the dependence on informal credit, such as moneylenders, who often charge exorbitant interest rates. This protects borrowers from falling into a debt trap and provides them with fair and transparent lending practices.
- Encouraging Entrepreneurship: Formal credit sources, such as banks, offer loans and support for business ventures. By expanding these sources, it encourages entrepreneurship and helps small businesses grow, leading to job creation and economic development.
Overall, expanding formal sources of credit in India enhances financial inclusion, reduces reliance on informal credit, and fosters entrepreneurship.
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