Gestation period
Topic: Rural Credit, Microfinance and Financial Inclusion · NCERT: Class 11, Ch 5 "Rural Development"
Meaning
The gestation period is the time between starting production (or making an investment) and earning money from it. In farming, it is the gap between sowing the crop and getting income from its sale. Class 10 puts the minimum gap at 3-4 months. The farmer spends money on inputs at the start of this period, but the income comes only at the end. That is why farmers need credit, and why rural credit matters so much. Class 11 calls this the long gestation period in agriculture.
Example
A farmer buys seeds, fertilisers and pesticides at the start of the season. The harvest is sold only months later. To cover input costs and family expenses in the meantime, the farmer takes a crop loan and repays it after the sale.
Don't confuse with
- Loan tenure (duration): the time allowed to repay a loan, such as 10 years for a housing loan. The gestation period is the wait before production earns anything.