Question 93 from UPSC CSE 2020 - ECONOMICS

Question

Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes?
1. Working capital for maintenance of farm assets
2. Purchase of combine harvesters, tractors, and mini-trucks.
3. Consumption requirements of farm households
4. Post-harvest expense
5. Construction of family house and setting up of village cold storage facility.
Select the correct answer using the code given below:

Accepted Answer

Correct Option: B. 1, 3, and 4 only

Strategy: Focus on the principal aim of the Kisan Credit Card (KCC) scheme: providing short-term, revolving working capital support to farmers for crop-related needs and essential consumption. Prioritize statements about immediate agricultural expenditure--working capital for maintenance (1), basic household consumption for farm households (3), and post-harvest expenses (4)--as these fit the short-term scope. Larger capital expenditures like purchasing harvesters/tractors (2) and construction of houses/cold storage (5) fall under medium or long-term credit, not generally covered under the standard KCC short-term facility. Thus, select only options that cover 1, 3, and 4.

Key Info: The Kisan Credit Card (KCC) scheme was introduced in 1998 by NABARD in collaboration with major Indian banks as a means to facilitate flexible and timely credit to farmers. It integrates working capital requirements so that farmers can purchase inputs (seeds, manure, fertilizers, pesticides), meet post-harvest expenses, and fund consumption needs of their households. KCC also covers allied agricultural activities like dairy and fishery.

Short-term credit (typically for a cropping season) is the core function, with the KCC enablement including a revolving cash credit account, overdraft facility, and prescribed credit limits based on landholding and cropping pattern. Banks assess limits based on the cost of cultivation, post-harvest expenses, and family requirements for sustenance.

Purchase of combine harvesters, tractors, and mini-trucks (statement 2) and construction of family house/village cold storage (statement 5) align with long-term, investment credit, which is distinct from the day-to-day working capital for which KCC is typically used. Such purposes may be financed under separate schemes or as investment credit within agricultural term loans, not the main KCC route.

Across all public, private, cooperative, and regional rural banks, KCC is counted as priority sector lending and remains a key conduit for concessional interest rates, crop insurance, and direct benefit transfers for farmers. The features, eligibility, and usage norms are set by the RBI and NABARD.

Answer

Option A: 1, 2, and 5 only

Answer

Option C: 2, 3, 4, and 5 only

Answer

Option D: 1, 2, 3, 4, and 5