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Q73 (IAS/2016) Economy › Schemes, Inclusion & Social Sector › Financial sector schemes Official Key

Pradhan Mantri MUDRA Yojana is aimed at

Explanation

The correct answer is option A. Micro Units Development and Refinance Agency Bank (MUDRA Bank) was set up in 2015 by the GOI to provide loans at low rates to Micro Finance Institutions (MFIs) and non-banking financial institutions, which then provide credit to MSMEs.[1] The purpose of MUDRA is to provide funding to the non-corporate (informal sector) small business sector such as small manufacturing units, shopkeepers, fruits and vegetable sellers, hair salons, beauty parlours, truck operators, hawkers, artisans in rural and urban areas with financing requirements of up to Rs 10 lakhs.[2] PMMY is aimed at funding the unfunded micro enterprises and small businesses by offering institutional credit to non-corporate,[4] non-farm micro and small[3] enterprises. By providing institutional credit to these informal sector entrepreneurs, the scheme effectively brings them into the formal financial system. The scheme is not about agricultural loans for specific crops (option B), pensions (option C), or funding voluntary organizations (option D).

Sources
  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
  2. [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 16. MUDRA Bank: > p. 84
  3. [3] https://www.pib.gov.in/PressReleasePage.aspx?PRID=2119781
  4. [4] https://www.pib.gov.in/PressReleasePage.aspx?PRID=2119781
PROVENANCE & STUDY PATTERN
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Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Q. Pradhan Mantri MUDRA Yojana is aimed at [A] bringing the small entrepreneurs into formal financial system [B] providing loans to poor f…
At a glance
Origin: Books + Current Affairs Fairness: Low / Borderline fairness Books / CA: 2.5/10 · 7.5/10

This is a textbook 'Flagship Scheme' question appearing one year post-launch (2015 launch, 2016 exam). It tests the fundamental definition found in the introductory paragraph of any government notification or standard economy text. If you missed this, you ignored the biggest financial inclusion headline of the year.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
Does Pradhan Mantri MUDRA Yojana aim to bring small entrepreneurs into the formal financial system
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
Presence: 5/5
“Micro Units Development and Refinance Agency Bank (MUDRA Bank) was set up in 2015 by the GOI to provide loans at low rates to Micro Finance Institutions (MFIs) and non-banking financial institutions, which then provide credit to MSMEs. The MUDRA Bank was set up under the Pradhan Mantri MUDRA Yojana scheme. Persons eligible to borrow from MUDRA Bank include: small manufacturing units, service sector units, shopkeepers, fruits/vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.”
Why this source?
  • Explicitly links MUDRA Bank/PMMY to providing credit to MSMEs and lists small entrepreneurs (shopkeepers, vendors, small manufacturing units) as eligible borrowers.
  • Describes institutional arrangement (MUDRA Bank providing low-rate loans to MFIs/NBFCs) that channels finance to small businesses through formal intermediaries.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 16. MUDRA Bank: > p. 84
Presence: 5/5
“Pending enactment of an act for MUDRA Bank, a Non-Banking Finance Company as MUDRA Ltd has been set up as a subsidiary of SIDBI.• The purpose of MUDRA is to provide funding to the non-corporate (informal sector) small business sector such as small manufacturing units, shopkeepers, fruits and vegetable sellers, hair salons, beauty parlours, truck operators, hawkers, artisans in rural and urban areas with financing requirements of up to Rs 10 lakhs.• MUDRA would be responsible for refinancing all Last Mile Financiers such as Micro Financial Institutions, NBFCs, Societies, Trusts, Companies, Co-operative Societies, SFBs, Scheduled Commercial Banks and RRBs which are in the business of lending to micro/small business entities engaged in manufacturing, trading and services activities (Refinancing means MUDRA loans will be available through Banks/NBFCs/MFIs and not direct lending).• MUDRA loans are available in three categories.”
Why this source?
  • States the purpose of MUDRA is to provide funding to the non-corporate (informal) small business sector such as shopkeepers, hawkers, artisans.
  • Explains refinancing via banks/NBFCs/MFIs (last-mile financiers), indicating integration of informal enterprises with formal financial institutions.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > Recent Government Initiatives for Promotion of MSME Sector > p. 395
Presence: 4/5
“Indian Industry 12.21 • 5. Credit Guarantee Scheme for micro and small enterprises, which includes collateral-free credit facility extended by qualified lending institutions including NBFC to new and existing MSMEs up to ₹200 lakh for borrowing unit. 6. Credit-Linked Capital Subsidy Scheme, which aims at encouraging technology upgradation of the MSME sector. 7. The Pradhan Mantri Mudra Yojana to provide funding to the non-corporate small business sector.”
Why this source?
  • Lists Pradhan Mantri Mudra Yojana among recent government initiatives to provide funding to the non-corporate small business sector.
  • Positions PMMY alongside other MSME-focused credit initiatives, reinforcing its role in formal credit provisioning to small enterprises.
Statement 2
Does Pradhan Mantri MUDRA Yojana aim to provide loans to poor farmers for cultivating particular crops
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"This includes those engaged in manufacturing, trading, services, and allied agricultural activities, such as poultry, dairy, and beekeeping."
Why this source?
  • Explicitly states PMMY provides loans to small businesses including allied agricultural activities (poultry, dairy, beekeeping).
  • Mentions activities other than crop cultivation, indicating the scheme targets micro/small enterprises rather than crop-specific farming.
Web source
Presence: 4/5
"Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Hon’ble Prime Minister on April 8, 2015 for providing loans up to 20 lakh ... to the non-corporate,"
Why this source?
  • Describes PMMY as a scheme to provide loans up to 20 lakh to non-corporate entrepreneurs and micro units.
  • Framing PMMY as entrepreneurship/enterprise credit suggests it is not specifically for poor farmers cultivating particular crops.
Web source
Presence: 4/5
"Pradhan Mantri Mudra Yojana (PMMY), the Flagship Programme of the Prime Minister aimed at Funding the Unfunded micro enterprises and small businesses."
Why this source?
  • Describes PMMY as the Flagship Programme aimed at 'Funding the Unfunded micro enterprises and small businesses'.
  • Emphasizes funding micro enterprises rather than targeting loans for specific crop cultivation by poor farmers.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > 2016| > p. 250
Strength: 3/5
“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 STARTING”
Why relevant

The snippet lists that option (b) 'providing loans to poor farmers for cultivating particular crops' appears as one of several stated aims of Pradhan Mantri MUDRA Yojana in a question-format item.

How to extend

A student could note this is presented as a multiple-choice distractor and compare with authoritative scheme descriptions to see if it is a correct aim or a wrong option.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 2.31 Previous Years Questions > p. 118
Strength: 3/5
“Pradhan Mantri MUDRA Yojana is aimed at [2016] • (a) Bringing the small entrepreneurs into formal financial system• (b) Providing loans to poor farmers for cultivating particular crops• (c) Providing pension to old and destitute persons• (d) Funding the voluntary organizations involved in the promotion of skill development and employment generation• 27. What is /are the purpose/ purposes of Government's Sovereign Gold Bond Scheme' and 'Gold Monetization Scheme'? [2016] • (i) To bring the idle gold lying with Indian households into the economy• (ii) To promote FDI in the gold and jewellery sector• (iii) To reduce India's dependence on gold imports Select the correct answer using the code given below. • (a) (i) only• (b) (ii) & (iii) only• (c) (i) & (iii) only• (d) (i), (ii) & (iii)”
Why relevant

Similar to [1], this source reproduces the same multiple‑choice list including the farmers/crops loan option, indicating that such an item has circulated as a question about MUDRA.

How to extend

Use this pattern (MCQ distractors repeated across texts) to suspect the farmers/crops claim may be a common incorrect option and then check scheme details.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
Strength: 5/5
“Micro Units Development and Refinance Agency Bank (MUDRA Bank) was set up in 2015 by the GOI to provide loans at low rates to Micro Finance Institutions (MFIs) and non-banking financial institutions, which then provide credit to MSMEs. The MUDRA Bank was set up under the Pradhan Mantri MUDRA Yojana scheme. Persons eligible to borrow from MUDRA Bank include: small manufacturing units, service sector units, shopkeepers, fruits/vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.”
Why relevant

Gives the explicit functional description of MUDRA: set up to provide low‑rate refinance to MFIs/NBFCs and to enable credit to MSMEs, listing small manufacturing, service units, vendors, artisans, etc., but not farmers or crop cultivation.

How to extend

A student can extend this by comparing MUDRA's beneficiary list to typical farmer-targeted programmes to infer whether crop loans fit MUDRA's mandate.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > Recent Government Initiatives for Promotion of MSME Sector > p. 395
Strength: 4/5
“Indian Industry 12.21 • 5. Credit Guarantee Scheme for micro and small enterprises, which includes collateral-free credit facility extended by qualified lending institutions including NBFC to new and existing MSMEs up to ₹200 lakh for borrowing unit. 6. Credit-Linked Capital Subsidy Scheme, which aims at encouraging technology upgradation of the MSME sector. 7. The Pradhan Mantri Mudra Yojana to provide funding to the non-corporate small business sector.”
Why relevant

States MUDRA's purpose as providing funding to the non-corporate small business sector, emphasizing micro and small enterprises rather than agricultural crop loans.

How to extend

Combine this with knowledge of what 'non-corporate small business sector' usually includes to assess if crop-specific farm loans are likely within MUDRA's scope.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 21: Sustainable Development and Climate Change > Part II: For Poor, including migrants and farmers > p. 620
Strength: 4/5
“• 3 months' loan moratorium on agricultural loans. Interest Subvention and Prompt Repayment Incentive on crop loans extended. • Additional credit to farmers through sanction of additional 25 lakh new Kisan Credit Cards (KCCs). • A new scheme to be launched under PMAY for migrant labourers or urban poor to provide ease of living to them at affordable rent.”
Why relevant

Lists separate agricultural credit measures (Kisan Credit Cards, agricultural loan moratorium, interest subvention) aimed at farmers, implying dedicated farmer credit channels exist outside MUDRA.

How to extend

A student could use this to hypothesize that crop cultivation loans would be handled by agriculture-specific schemes rather than MUDRA, and then verify scheme mandates.

Statement 3
Does Pradhan Mantri MUDRA Yojana aim to provide pensions to old and destitute persons
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"Pradhan Mantri Mudra Yojana (PMMY), the Flagship Programme of the Prime Minister aimed at Funding the Unfunded micro enterprises and small businesses."
Why this source?
  • Explicitly describes PMMY as 'aimed at Funding the Unfunded micro enterprises and small businesses' — focus is entrepreneurship/credit, not pensions.
  • Frames PMMY as a flagship programme to expand financial inclusion for micro-enterprises, indicating its objective is lending/support for businesses.
Web source
Presence: 5/5
"PMMY has supported these journeys by offering institutional credit to non-corporate, non-farm micro and small enterprises."
Why this source?
  • States PMMY 'has sanctioned over 52 crore loans' and 'offering institutional credit to non-corporate, non-farm micro and small enterprises' — shows PMMY provides loans, not pensions.
  • Highlights micro-entrepreneurship (salons, mechanic shops, mobile repair businesses) as beneficiaries, consistent with a credit/entrepreneurship scheme.
Web source
Presence: 5/5
"PMMY loans are being extended by all Public and Private Sector Commercial Banks, Regional Rural Banks (RRBs), Cooperative Banks, Foreign Banks, Micro Finance Institutions and Non-Banking Finance Companies."
Why this source?
  • Describes implementation: 'PMMY loans are being extended by all Public and Private Sector Commercial Banks, Regional Rural Banks... Micro Finance Institutions and Non-Banking Finance Companies' — confirms loan-centric design.
  • Discussion of awareness, loan application forms and credit camps further indicates an emphasis on loan delivery, not pension provision.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
Strength: 5/5
“Micro Units Development and Refinance Agency Bank (MUDRA Bank) was set up in 2015 by the GOI to provide loans at low rates to Micro Finance Institutions (MFIs) and non-banking financial institutions, which then provide credit to MSMEs. The MUDRA Bank was set up under the Pradhan Mantri MUDRA Yojana scheme. Persons eligible to borrow from MUDRA Bank include: small manufacturing units, service sector units, shopkeepers, fruits/vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.”
Why relevant

Defines MUDRA Bank as set up (under Pradhan Mantri MUDRA Yojana) to provide low‑rate loans and refinance to MFIs/NBFCs for credit to MSMEs and lists eligible borrowers (shopkeepers, artisans, vendors).

How to extend

A student can extend this by noting MUDRA's explicit loan/credit focus (micro‑enterprise finance) and therefore judge that pension provision is not its stated function.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > 2016| > p. 250
Strength: 4/5
“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 STARTING”
Why relevant

Presents a multiple‑choice list of aims attributed to Pradhan Mantri MUDRA Yojana, including 'bringing small entrepreneurs into formal financial system' and (as one option) 'providing pensions to old and destitute persons' — i.e., shows pension is presented as a possible option to assess.

How to extend

A student can use this to recognize that authoritative lists place entrepreneurship/credit as a primary aim; combined with other descriptions one can suspect the pension option is a distractor.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 2.31 Previous Years Questions > p. 118
Strength: 3/5
“Pradhan Mantri MUDRA Yojana is aimed at [2016] • (a) Bringing the small entrepreneurs into formal financial system• (b) Providing loans to poor farmers for cultivating particular crops• (c) Providing pension to old and destitute persons• (d) Funding the voluntary organizations involved in the promotion of skill development and employment generation• 27. What is /are the purpose/ purposes of Government's Sovereign Gold Bond Scheme' and 'Gold Monetization Scheme'? [2016] • (i) To bring the idle gold lying with Indian households into the economy• (ii) To promote FDI in the gold and jewellery sector• (iii) To reduce India's dependence on gold imports Select the correct answer using the code given below. • (a) (i) only• (b) (ii) & (iii) only• (c) (i) & (iii) only• (d) (i), (ii) & (iii)”
Why relevant

Contains the same MCQ options as [1], repeating the pension option alongside credit/inclusion aims for MUDRA, indicating exam sources treat these as alternative choices rather than confirming pensions as MUDRA's aim.

How to extend

A student might compare this MCQ framing with independent descriptions of MUDRA to see which option matches the scheme's primary activities.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > by the Ministry of Labour & Employment) > p. 393
Strength: 4/5
“(by the Ministry of Labour & Employment) Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) - It is a voluntary and contributory pension scheme to benefit unorganised sector workers (18-40 years old) whose monthly income is ₹15,000 or below. The beneficiary has to pay prescribed monthly contribution and the central government provides equal contribution. In return, minimum monthly pension of ₹3,000 is given after 60 years of age. National Pension Scheme for Traders, Shopkeepers and Self-Employed Persons - It is again a voluntary and contributory pension scheme for traders, shopkeepers and self-employed persons (18-40 years old) having an annual turnover not exceeding ₹1.5 crore and who are not a member of EPFO/ESIC/NPS/PM-SYM or an income taxpayer.”
Why relevant

Describes separate government pension schemes (PM‑SYM, National Pension Scheme for Traders) with explicit pension mechanics, showing that pensions are delivered via dedicated schemes.

How to extend

A student can infer that pensions are typically provided through named pension schemes, so unless MUDRA is described similarly, it is unlikely to be a pension provider.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > Recent Major Initiatives to Improve Financial Inclusion Are > p. 239
Strength: 3/5
“• Pradhan Mantri Jan Dhan Yojana (PMJDY): Launched in 2014, it is a national mission for Financial Inclusion. It seeks to provide access to basic financial services through banks. Over 34 crore accounts have been opened under PMJDY. • Pradhan Mantri Suraksha Bima Yojana (PMSBY): It provides a renewable 1-year accidental death cum disability cover of ₹2 lakh to all subscribing bank account holders (in the age group of 18-70 years) at a minimal premium of ₹12 per annum per subscriber.”
Why relevant

Lists other PM schemes (PMJDY, PMSBY) that target financial inclusion and insurance/pension access, illustrating that different social objectives (credit, insurance, pensions) are addressed by distinct schemes.

How to extend

A student can use this pattern — distinct schemes for credit vs pensions — to test whether MUDRA fits the pension role or the credit role by checking its stated activities.

Statement 4
Does Pradhan Mantri MUDRA Yojana aim to fund voluntary organizations involved in promoting skill development and employment generation
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 4/5
"PMMY has supported these journeys by offering institutional credit to non-corporate, non-farm micro and small enterprises"
Why this source?
  • Explicitly describes PMMY as offering institutional credit to non-corporate, non-farm micro and small enterprises.
  • This focus on micro and small enterprises indicates the scheme targets entrepreneurs/businesses rather than voluntary organizations for skill development.
Web source
Presence: 4/5
"PMMY loans are being extended by all Public and Private Sector Commercial Banks, Regional Rural Banks (RRBs), Cooperative Banks, Foreign Banks, Micro Finance Institutions and Non-Banking Finance Companies."
Why this source?
  • Describes how PMMY loans are extended through banks, RRBs, cooperative banks, MFIs and NBFCs — a lending-to-business model.
  • The implementation description supports that PMMY channels credit to micro-enterprises via financial institutions, not to voluntary skill-development organizations.
Web source
Presence: 4/5
"A scheme for funding the unfunded “Millions of common men and women of this country, who run small business, have"
Why this source?
  • Labels PMMY as 'Funding the unfunded' and a scheme for funding millions who run small businesses in the informal sector.
  • This characterization emphasizes support to small business operators rather than voluntary organizations for skill or employment promotion.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
Strength: 5/5
“Micro Units Development and Refinance Agency Bank (MUDRA Bank) was set up in 2015 by the GOI to provide loans at low rates to Micro Finance Institutions (MFIs) and non-banking financial institutions, which then provide credit to MSMEs. The MUDRA Bank was set up under the Pradhan Mantri MUDRA Yojana scheme. Persons eligible to borrow from MUDRA Bank include: small manufacturing units, service sector units, shopkeepers, fruits/vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas.”
Why relevant

Defines MUDRA Bank's purpose and lists eligible borrowers (small manufacturing units, service units, shopkeepers, vendors, artisans, etc.), implying MUDRA targets micro-enterprises rather than voluntary organisations.

How to extend

A student could compare this beneficiary list with the concept of 'voluntary organisations' and infer whether such organisations fit MUDRA’s stated borrower types.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > Recent Government Initiatives for Promotion of MSME Sector > p. 395
Strength: 5/5
“Indian Industry 12.21 • 5. Credit Guarantee Scheme for micro and small enterprises, which includes collateral-free credit facility extended by qualified lending institutions including NBFC to new and existing MSMEs up to ₹200 lakh for borrowing unit. 6. Credit-Linked Capital Subsidy Scheme, which aims at encouraging technology upgradation of the MSME sector. 7. The Pradhan Mantri Mudra Yojana to provide funding to the non-corporate small business sector.”
Why relevant

States the Pradhan Mantri Mudra Yojana provides funding to the non-corporate small business sector, indicating the scheme’s focus on business credit.

How to extend

Using the generic definition of 'non-corporate small business sector' (e.g., sole proprietors, micro-enterprises), a student could assess whether voluntary organisations are normally included in that category.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > 2016| > p. 250
Strength: 3/5
“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 STARTING”
Why relevant

Presents a multiple-choice item listing 'funding the voluntary organizations involved in the promotion of skill development and employment generation' as one option about MUDRA’s aims, showing this idea is circulated as a possible—but not affirmed—purpose.

How to extend

A student could treat this as an indicator the claim has been proposed in questions and therefore should be checked against official beneficiary lists or scheme objectives.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 2.31 Previous Years Questions > p. 118
Strength: 3/5
“Pradhan Mantri MUDRA Yojana is aimed at [2016] • (a) Bringing the small entrepreneurs into formal financial system• (b) Providing loans to poor farmers for cultivating particular crops• (c) Providing pension to old and destitute persons• (d) Funding the voluntary organizations involved in the promotion of skill development and employment generation• 27. What is /are the purpose/ purposes of Government's Sovereign Gold Bond Scheme' and 'Gold Monetization Scheme'? [2016] • (i) To bring the idle gold lying with Indian households into the economy• (ii) To promote FDI in the gold and jewellery sector• (iii) To reduce India's dependence on gold imports Select the correct answer using the code given below. • (a) (i) only• (b) (ii) & (iii) only• (c) (i) & (iii) only• (d) (i), (ii) & (iii)”
Why relevant

Repeats the same MCQ options (including the voluntary-organisation option), reinforcing that this attribution has appeared in exam-style materials but not confirming it.

How to extend

A student could use this repetition to prioritize verifying the option by cross-checking with scheme descriptions (e.g., beneficiary lists or implementing agency mandates).

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 7: Indian Economy after 2014 > Some initiatives of Govt. of India for Skilling: > p. 240
Strength: 4/5
“• Pradhan Mantri Kaushal Vikas Yojana• Pradhan Mantri Kaushal Kendra• Jan Sikshan Sansthan• Skill Acquisition and Knowledge Awareness for Livelihood Promotion ("SANKALP")• Aspirational Skilling Abhiyan• National Apprenticeship Promotion Scheme (NAPS)• Skill Strengthening for Industrial Value Enhancement (STRIVE)”
Why relevant

Lists separate government skilling initiatives (PMKVY, SANKALP, NAPS, etc.), implying skill development and employment generation are addressed by distinct programmes.

How to extend

A student could infer that skill-promotion funding is more likely channeled through these specialised schemes rather than MUDRA, and thus seek official mandate texts to confirm.

Pattern takeaway: UPSC creates distractors by borrowing objectives from parallel sectors. The pattern is 'Right Scheme, Wrong Sector' matching. You must identify the specific 'Ministry Silo' the scheme belongs to (e.g., Finance vs Agriculture vs Rural Dev).
How you should have studied
  1. [THE VERDICT]: Sitter. Major scheme launched in 2015, asked in 2016. Covered in India Year Book, Economic Survey, and all standard Economy notes (Singhania/Singh).
  2. [THE CONCEPTUAL TRIGGER]: Financial Inclusion and the 'Missing Middle' problem in Indian MSME credit (moving informal sector to formal credit).
  3. [THE HORIZONTAL EXPANSION]: Memorise the 3 loan tiers: Shishu (up to ₹50k), Kishore (₹50k-₹5L), Tarun (₹5L-₹10L). Contrast with 'Stand-Up India' (SC/ST/Women, ₹10L-₹1Cr) and 'PM SVANidhi' (Street Vendors). Note that MUDRA provides *refinance* to intermediaries, not direct lending.
  4. [THE STRATEGIC METACOGNITION]: Distractors are not random; they are objectives of *other* ministries. Option B is Agriculture (KCC), Option C is Social Justice (NSAP), Option D is Skill Development (NSDC). Always segregate schemes by 'Target Beneficiary' (Farmer vs Entrepreneur vs Destitute) to defeat these swaps.
Concept hooks from this question
📌 Adjacent topic to master
S1
👉 MUDRA's core objective: funding non-corporate small businesses
💡 The insight

Multiple references state PMMY/MUDRA’s purpose is to fund non-corporate/informal small business units (shopkeepers, artisans, vendors), which addresses the statement directly.

High-yield for UPSC questions on financial inclusion and MSME support—understanding the objective clarifies policy intent vs other schemes. Connects to topics on MSME policy, credit delivery, and rural-urban livelihoods. Prepare by memorising scheme objectives, target beneficiaries, and scope; practise comparing similar schemes.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 16. MUDRA Bank: > p. 84
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > Recent Government Initiatives for Promotion of MSME Sector > p. 395
🔗 Anchor: "Does Pradhan Mantri MUDRA Yojana aim to bring small entrepreneurs into the forma..."
📌 Adjacent topic to master
S1
👉 Refinancing & last-mile financiers as delivery mechanism
💡 The insight

Evidence explains MUDRA provides refinance to MFIs/NBFCs/Banks who then lend to small entrepreneurs, showing how informal units access formal finance.

Important for questions on implementation design—distinguishes direct lending vs channelled finance. Links to banking structure, NBFCs, and financial inclusion strategy. Study implementation mechanisms, stakeholder roles, and flow of funds for answer precision.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 16. MUDRA Bank: > p. 84
🔗 Anchor: "Does Pradhan Mantri MUDRA Yojana aim to bring small entrepreneurs into the forma..."
📌 Adjacent topic to master
S1
👉 Positioning PMMY within financial inclusion & MSME initiatives
💡 The insight

References place PMMY among government credit initiatives for MSMEs and in the broader financial inclusion context alongside schemes like PMJDY.

Useful for synthesis questions comparing schemes; shows how targeted credit (PMMY) complements account-based inclusion (PMJDY). Master by mapping scheme objectives, beneficiaries, and complementarities; enables comparative and policy-evaluation answers.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > Recent Government Initiatives for Promotion of MSME Sector > p. 395
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > Recent Major Initiatives to Improve Financial Inclusion Are > p. 239
🔗 Anchor: "Does Pradhan Mantri MUDRA Yojana aim to bring small entrepreneurs into the forma..."
📌 Adjacent topic to master
S2
👉 MUDRA Yojana — objective and beneficiaries
💡 The insight

References describe MUDRA as a scheme to fund non-corporate small business sector and list eligible borrowers (micro units, shopkeepers, vendors, artisans), not crop-specific farmers.

High-yield for UPSC because questions often ask to match schemes to target groups; understanding MUDRA's focus on micro-enterprises helps eliminate confusions with agricultural schemes. Prepare by memorising scheme objectives, typical beneficiary lists, and implementation agencies.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 12: Indian Industry > Recent Government Initiatives for Promotion of MSME Sector > p. 395
🔗 Anchor: "Does Pradhan Mantri MUDRA Yojana aim to provide loans to poor farmers for cultiv..."
📌 Adjacent topic to master
S2
👉 Distinguish credit schemes from agricultural schemes (MUDRA vs PMFBY/PMKSY)
💡 The insight

Evidence includes MUDRA's small-business focus and separate schemes for crop insurance (PMFBY) and irrigation (PMKSY), highlighting different aims for farmer support versus micro-enterprise credit.

Useful for UPSC because many MCQs/analytical questions test ability to differentiate overlapping-sounding schemes. Learn by grouping central schemes by sector (finance, agriculture, insurance) and by beneficiary (farmers vs MSMEs).

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.14 Pradhan Mantri FasalBima Yojana (PMFBY) > p. 321
  • INDIA PEOPLE AND ECONOMY, TEXTBOOK IN GEOGRAPHY FOR CLASS XII (NCERT 2025 ed.) > Chapter 4: Water Resources > Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) > p. 44
🔗 Anchor: "Does Pradhan Mantri MUDRA Yojana aim to provide loans to poor farmers for cultiv..."
📌 Adjacent topic to master
S2
👉 Implementation mechanism of MUDRA — role of MUDRA Bank and intermediaries
💡 The insight

Reference explains MUDRA Bank provides low-rate refinance to MFIs and NBFCs, which then extend credit to MSMEs and micro units.

Important for questions on scheme architecture and delivery mechanisms; knowing implementation channels (refinance → MFIs/NBFCs → beneficiaries) helps answer 'how' and 'why' type questions. Revise by mapping schemes to implementing agencies and flow of funds.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
🔗 Anchor: "Does Pradhan Mantri MUDRA Yojana aim to provide loans to poor farmers for cultiv..."
📌 Adjacent topic to master
S3
👉 MUDRA Yojana: objective & beneficiaries
💡 The insight

References describe MUDRA/MUDRA Bank as a credit facility aimed at micro‑units, small entrepreneurs and MSMEs — directly relevant to judging whether it is a pension scheme.

UPSC frequently asks the purpose, target group and instruments of flagship schemes. Knowing MUDRA's loan/credit focus (who can borrow, scope and year of creation) helps distinguish it from social security schemes and avoids conflating objectives. Prepare by tabulating each flagship scheme's objective, beneficiaries and benefit type (credit vs cash/pension/insurance).

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MUDRA Bank > p. 183
🔗 Anchor: "Does Pradhan Mantri MUDRA Yojana aim to provide pensions to old and destitute pe..."
🌑 The Hidden Trap

MUDRA was initially set up as a wholly-owned subsidiary of SIDBI. While MUDRA sets the rules, the actual lending is done by Banks, NBFCs, and MFIs (Last Mile Financiers). The 'Next Logical Question' often targets the funding source or the parent entity (SIDBI).

⚡ Elimination Cheat Code

Decode the acronym. MUDRA = **Micro Units** Development. 'Micro Units' implies business enterprises. 'Farmers' (Option B) are distinct in policy language (Kisan). 'Destitute' (Option C) implies welfare/pension, not development. 'Voluntary Orgs' (Option D) implies NGOs. Only Option A mentions 'Entrepreneurs', which aligns linguistically with 'Micro Units'.

🔗 Mains Connection

Connects to GS-3 (Inclusive Growth & Employment). MUDRA addresses the 'informal' nature of India's economy (where ~90% of the workforce is informal) by formalising credit access, aiming to shift subsistence-level self-employment into surplus-generating micro-enterprises.

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SIMILAR QUESTIONS

IAS · 2015 · Q1 Relevance score: 1.49

'Pradhan Mantri Jan-Dhan Yojana' has been launched for

IAS · 2018 · Q78 Relevance score: 0.28

With reference to Pradhan Mantri Kaushal Vikas Yojana, consider the following statements : 1. It is the flagship scheme of the Ministry of Labour and Employment. 2. It, among other things, will also impart training in soft skills, entrepreneurship, financial and digital literacy. 3. It aims to align the competencies of the unregulated workforce of the country to the National Skill Qualification Framework. Which of the statements given above is/are correct ?

CDS-I · 2018 · Q105 Relevance score: -0.10

Which one of the following is not an objective of the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY)?

CAPF · 2017 · Q8 Relevance score: -0.57

Which one of the following statements about Pradhan Mantri Ujjwaia Yojana is NOT correct ?