Why will Arun have a higher income from cultivation compared to Shyamal?


Arun will have a higher income from cultivation compared to Shyamal due to following reasons:

Arun gets a loan from a commercial bank at the interest rate of 8.5% per annum, whereas Shyamal gets loan from a village moneylender at the interest rate of 5% per month (i.e., 60% per annum). Arun has more calibers to pay bank loan as compared to Shyamal and also he gets a fresh loan in next three years. As Shyamal he is not restricted to sell his product to the moneylenders who provide him a low price. He has the benefit of selling his product at market rates.


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