Importance of Moral Values

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Money is a fascinating subject and full of curiosities. It is important to capture this element for the students. The history of money and how various forms were used at different times is an interesting story. At this stage the purpose is to allow students to realise the social situation in which these forms were used. Modern forms of money are linked to the banking system. This is the central idea of the first part of the chapter. The present situation in India, where newer forms of money are slowly spreading with computerisation of the banking system, offers many opportunities to students to explore on their own. We need not get into a formal discussion of the ‘functions of money’ but let it come up as questions. There are certain areas that are not covered such as ‘creation of money’ (money multiplier) or the backing of the modern system that may be discussed if you desire. Credit is a crucial element in economic life and it is therefore important to first understand this in a conceptual manner. What are the aspects that one looks at in any credit arrangement and how this affects people is the main focus of the second part of the chapter. The world around us offers a tremendous variety of such arrangements and it would be ideal to explain these aspects of credit from situations that are familiar to your students. The other crucial issue of credit is its availability to all, especially the poor, and on reasonable terms. We need to emphasise that this is a right of the people and without which a large section of them would be kept out of the development process. There are many innovative interventions, such as that of Grameen Bank, that students may be made familiar with but it is important to realise that we don’t have answers to all questions. We need to find new ways and this is one of the social challenges that developing countries face.

Sources for Information
The data on formal and informal sector credit used in this chapter is drawn from the survey on rural debt by the National Sample Survey Organisation (All India Debt and Investment Survey, 2003, conducted by NSSO, Report No. 501, December 2005). The information and data on Grameen Bank is taken from newspaper reports and websites. In order to get the details of bank-related statistics or a particular detail of a bank, you can log on to the websites of Reserve Bank of India ( and the concerned banks. Data on self-help groups is provided on the website of National Bank for Agriculture and Rural Development (NABARD) (




The use of money spans a very large part of our everyday life. Look around you and you would easily be able to identify several transactions involving money in any single day. Can you make a list of these? In many of these transactions, goods are being bought and sold with the use of money. In some of these transactions, services are being exchanged with money. For some, there might not be any actual transfer of money taking place now but a promise to pay money later. Have you ever wondered why transactions are made in money? The reason is simple. A person holding money can easily exchange it for any commodity or service that he or she might want. Thus everyone prefers to receive payments in money and then exchange the money for things that they want. Take the case of a shoe manufacturer. He wants to sell shoes in the market and buy wheat. The shoe manufacturer will first exchange shoes that he has produced for money, and then exchange the money for wheat. Imagine how much more difficult it would be if the shoe manufacturer had to directly exchange shoes for wheat without the use of money. He would have to look for a wheat growing farmer who not only wants to sell wheat I’LL GIVE but also wants to buy the YOU SHOES shoes in...
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