UPSC Prelims 2020 Q66: Indian Economy – Agriculture & Rural Development
- (a) 1, 2 and 5 only
- (b) 1, 3 and 4 only
- (c) 2, 3, 4 and 5 only
- (d) 1, 2, 3, 4 and 5
Answer: (b) 1, 3 and 4 only
Explanation
Kisan Credit Card (KCC): Purposes for Short-Term Credit
| Purpose | Eligible for short-term support? |
|---|---|
| 1. Working capital for farm assets maintenance | YES |
| 2. Farm machinery, tractors, tools purchase | NO - long-term capital, not short-term |
| 3. Household consumption | YES |
| 4. Post-harvest expenses | YES |
| 5. House construction + cold storage | NO - long-term infrastructure |
KCC short-term purposes: Working capital, consumption, post-harvest costs. NOT equipment/machinery (separate long-term schemes exist).
Answer: (b) 1, 3 and 4 only.
Why each option is right or wrong
- (a) Incorrect. Includes machinery (2), which is long-term.
- (b) CORRECT. Items 1 (maintenance capital), 3 (consumption), 4 (post-harvest) are short-term KCC purposes. Items 2, 5 are long-term.
- (c) Incorrect. Includes item 5 (infrastructure), which is long-term.
- (d) Incorrect. Includes items 2 and 5 (long-term).
Key point
KCC (launched 1998): Rs 3 lakh per farmer typically. Short-term: 18 months (seasonal). Covers: wage costs, fertilizer, seed, consumption, post-harvest. Long-term schemes separate (PACS machinery loan, NABARD equipment).
Remember
Kisan Credit Card can provide short-term credit support for: (1) Working capital for maintenance of farm assets (correct), (3) Consumption requirements of farm households (correct), (4) Post-harvest expenses (correct). Long-term purchases like machinery (2) and infrastructure like cold storage (5) are NOT part of short-term KCC.
Common mistakes
- Confusing KCC (short-term) with machinery loans (long-term PACS schemes).
- Assuming consumption credit = non-agricultural. KCC explicitly allows household consumption (to prevent money-lender dependence).
- Missing post-harvest expenses - often overlooked but eligible (transportation, storage, market charges).
Exam tip
Agricultural credit in India: KCC (short-term working capital), PACS (short + medium), NABARD (long-term machinery + infrastructure). Multi-tier system with overlap.
Sources
- NABARD - Kisan Credit Card Scheme Guidelines
- RBI - Agricultural Credit Delivery Schemes