UPSC Prelims 2016 · Question 98 of 98

UPSC Prelims 2016 question on MUDRA Yojana

Pradhan Mantri MUDRA Yojana is aimed at

  1. bringing the small entrepreneurs into formal financial system
  2. providing loans to poor farmers for cultivating particular crops
  3. providing pensions to old and destitute persons
  4. funding the voluntary organizations involved in the promotion of skill development and employment generation
Show answer

Answer: A. bringing the small entrepreneurs into formal financial system

Verdict

The answer is bringing small entrepreneurs into the formal financial system. That is the aim of the Pradhan Mantri MUDRA Yojana.

Analysis

The scheme provides funding to the non corporate, non farm small and micro enterprise sector through refinance to lending institutions, with loans classified as Shishu, Kishore and Tarun by size. Its purpose is to bring sole proprietors and small enterprise owners, who had previously depended on informal lenders, into formal finance. The crop loan option describes agricultural credit, the pension option describes social security schemes, and the voluntary organisation option describes skill development funding, none of which is MUDRA's remit.

Source

The Hindu report on the conversion of MUDRA into a bank.

How to crack it

Decode the acronym, since Micro Units Development and Refinance Agency names both its beneficiary, micro units, and its method, refinance, so the answer is contained in the expansion. Note the method carefully as well: MUDRA refinances lenders rather than lending directly to borrowers, which is a distinction UPSC has tested. Beneficiary plus delivery mechanism is the pair worth logging for every credit scheme.

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