UPSC Prelims 2016 Q73: Indian Economy – Digital Payments & Financial Inclusion

UPSC Prelims 2016, General Studies Paper I · Indian Economy

Pradhan Mantri MUDRA Yojana is aimed at

(a) bringing the small entrepreneurs into formal financial system
(b) providing loans to poor farmers for cultivating particular crops
(c) providing pensions to old and destitute persons
(d) funding the voluntary organizations involved in the promotion of skill development and employment generation

Answer: (a) bringing the small entrepreneurs into formal financial system

Explanation

Pradhan Mantri MUDRA Yojana (PMMY)

Launched in April 2015.

MUDRA = Micro Units Development and Refinance Agency.

Its motto is 'funding the unfunded'.

Loans go to non-corporate, non-farm small and micro enterprises, without collateral.

The options checked:

Option	Verdict
(a) Bringing the small entrepreneurs into formal financial system	Correct
(b) Loans to poor farmers for cultivating particular crops	Incorrect; MUDRA is for non-farm units
(c) Pensions to old and destitute persons	Incorrect
(d) Funding voluntary organizations for skill development	Incorrect

Answer: (a) bringing the small entrepreneurs into formal financial system.

(a) CORRECT. MUDRA brings small entrepreneurs into the formal financial system.
(b) Incorrect. MUDRA loans are for non-farm units, not for farmers growing crops.
(c) Incorrect. Pensions come under schemes such as the Atal Pension Yojana.
(d) Incorrect. It does not fund voluntary organizations for skill development.

PMMY (2015): collateral-free loans up to Rs 10 lakh to non-farm micro enterprises; Shishu, Kishore, Tarun; 'funding the unfunded'.

MUDRA = small loans for small non-farm businesses.

Thinking MUDRA lends to farmers; crop loans come through the Kisan Credit Card.
Mixing up the limits of Shishu, Kishore and Tarun.
Believing MUDRA lends directly; it refinances banks and other lenders.

Shishu, Kishore, Tarun = child, adolescent, youth: the loan grows with the business.