Social Science — CBSE Class 10 board question

Positive Role of Credit:
Credit plays a vital positive role when it helps a borrower increase earnings. For example, Salim, a shoe manufacturer, took a loan to purchase raw materials and hire workers to complete a bulk order. He delivered the order on time, earned a good profit, and repaid the loan easily. Here, credit met his working capital needs and improved his income.

Negative Role of Credit:
Credit can push a borrower into a debt trap when risks are high. For example, Swapna, a small farmer, borrowed from a moneylender for cultivation. Her crop failed due to pests. She could not repay the loan; interest kept accumulating. Next year's earnings were still insufficient. Finally, she had to sell part of her land to repay the debt, leaving her worse off than before.

Conclusion: Whether credit is useful depends on the risks involved and availability of support in case of loss.

Source: Chapter 3 – Money and Credit, "Two Different Credit Situations"

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• Examiners expect one clear positive example (Salim) and one clear negative example (Swapna) — both are directly from the textbook.
• Key terms to use: working capital, debt trap, repayment.
• The conclusion about "risks in the situation" is from the textbook and earns the final mark.
• For 5 marks: ~2 marks for positive role + example, ~2 marks for negative role + example, ~1 mark for conclusion/linking statement.