Question map
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 expenses 5. Construction of family house and setting up of village cold storage facility Select the correct answer using the code given below :
Explanation
The correct answer is Option 2 (1, 3 and 4 only). The Kisan Credit Card (KCC) scheme is primarily designed to meet the short-term credit requirements of farmers for cultivation and allied activities.
The following points justify why Option 2 is correct:
- Statement 1, 3, and 4: These are core objectives of KCC. It provides liquidity for working capital (maintenance of farm assets), consumption requirements of the household, and post-harvest expenses.
- Statement 2: Purchase of heavy machinery like tractors or mini trucks requires long-term investment credit, which falls outside the primary "short-term credit support" scope mentioned in the question context.
- Statement 5: Construction of houses or cold storage facilities are capital-intensive, long-term investments. KCC focuses on operational costs rather than major infrastructure development.
Thus, by eliminating long-term capital investments (2 and 5), we arrive at the correct combination of short-term needs.
PROVENANCE & STUDY PATTERN
Full viewThis is a classic 'Definition Boundary' question. UPSC tested if you understand the difference between 'Working Capital' (Short-term/Recurring) and 'Capital Investment' (Long-term/One-time). Standard economy books list the 5 specific components of the KCC limit explicitly; if you missed the 'Short-term' keyword in the stem, you walked into the trap.
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Statement 1: Under the Kisan Credit Card scheme, is short-term credit support provided to farmers for working capital for maintenance of farm assets?
- Statement 2: Under the Kisan Credit Card scheme, is short-term credit support provided to farmers for purchase of combine harvesters, tractors and mini trucks?
- Statement 3: Under the Kisan Credit Card scheme, is short-term credit support provided to farmers for consumption requirements of farm households?
- Statement 4: Under the Kisan Credit Card scheme, is short-term credit support provided to farmers for post-harvest expenses?
- Statement 5: Under the Kisan Credit Card scheme, is short-term credit support provided to farmers for construction of family house and setting up of village cold storage facility?
- Explicitly lists 'Working capital for maintenance of farm assets' as a permitted use of KCC.
- Also groups working capital with allied activities and investment credit, linking it to routine farm requirements.
- Defines the KCC aim as providing adequate and timely short-term credit support to farmers.
- Specifies short-term credit requirements for cultivation of crops, aligning with working-capital needs.
- Describes KCC as designed to facilitate short-term formal credit to farmers.
- Identifies institutional intent to provide short-term credit through the scheme.
- Lists the specific purposes covered by KCC short-term credit (cultivation, post-harvest, marketing, consumption, working capital).
- Separately mentions “Investment credit requirement for agriculture”, implying purchase of capital items is an investment credit category distinct from short-term credit.
- Describes KCC as providing credit to meet short term / long term cultivation requirements, postharvest expenses and consumption requirements.
- Distinguishes short-term and long-term needs, supporting that capital purchases would fall under investment/longer-term credit rather than the short-term list.
This source lists 'Purchase of combine harvesters, tractors and mini trucks' among multiple options when asking which purposes KCC short-term credit covers, implying this item is considered in standard examinations of KCC's scope.
A student could take this as an indication that machinery purchase is debated as within KCC scope and then check official KCC purpose lists or bank circulars to confirm.
Similar to [1], this is the same multiple‑choice formulation including machinery purchase (combine harvesters, tractors, mini trucks) as a candidate purpose for KCC short-term credit.
Use this repeated exam framing to justify searching authoritative scheme documents or RBI/NABARD guidelines to verify whether such capital items are included.
States KCC 'aims at providing adequate and timely credit support... to meet the short-term credit requirements for cultivation of crops', giving a rule that KCC is explicitly for short‑term cultivation needs.
A student could contrast 'short‑term cultivation requirements' with purchase of durable machinery (a capital/investment need) to judge if machinery purchase fits the stated short‑term purpose.
Lists KCC covers 'Working capital for maintenance of farm assets and activities allied to agriculture' and 'Investment credit requirement for agriculture and allied activities like pump sets, sprayers, dairy animals etc.', showing KCC can cover some investment items.
From this pattern (KCC can cover certain investment items), a student might infer machinery could be covered under 'investment credit' and then check limits/definitions in official guidelines.
Highlights the issue of diversion of agricultural credit for non‑agricultural purposes, indicating scrutiny exists over whether credit is used for non‑farm items like vehicles.
A student could use this cautionary pattern to investigate whether mini trucks (potentially non‑agricultural) are permitted under KCC or considered diversion.
- Explicitly lists 'Consumption requirements of farmer household' among KCC purposes.
- Also enumerates post-harvest, working capital and investment needs showing the scheme's range of short-term credit uses.
- Mentions policy measures to provide short-term credit at subsidised rates, reinforcing the short-term nature.
- Describes KCC as designed to facilitate short-term formal credit to farmers.
- Confirms the scheme's primary focus on short-term agricultural credit provision through banks.
- States KCC aims to provide adequate and timely credit support under a single window.
- Specifically cites meeting short-term credit requirements for cultivation, supporting the scheme's short-term orientation.
- Explicitly lists "Post-harvest expenses" as one of the KCC purposes.
- Groups post-harvest expenses with other short-term and consumption needs under KCC's scope.
- Describes KCC as designed to facilitate short-term formal credit to farmers.
- Establishes the scheme's short-term credit orientation relevant to post-harvest needs.
- States KCC provides adequate and timely credit support under a single window.
- Specifies meeting short-term credit requirements (underscores the short-term nature of KCC).
- Official scheme page lists the specific short-term uses covered by KCC (cultivation, post-harvest, marketing, household consumption, working capital).
- The listed purposes do not mention construction of a family house or setting up a village cold storage as short-term credit uses.
- PIB description states KCC was introduced to provide affordable credit for agricultural needs to meet short-term/long-term cultivation, postharvest expenses and consumption requirements.
- This framing confines KCC support to agricultural and related household consumption needs, not house construction or village cold storage explicitly.
- Bank document lists the short-term credit items covered by KCC: crop cultivation, post-harvest activities, marketing loans, household consumption, and working capital for farm maintenance and allied activities.
- No mention is made of providing short-term credit for constructing family houses or establishing village cold storage in this list.
States KCC aims to provide adequate and timely credit support for 'short-term credit requirements for cultivation of crops'.
A student can use this rule to judge that KCC primarily targets crop cultivation needs, so non-cultivation items like house construction may not fit the core aim.
Specifies KCC covers short-term agricultural loans and allied activities (animal husbandry, dairying, poultry, fisheries) and gives loan-size/interest details.
Use the allied-activities list to see if 'cold storage' counts as an allied/post-harvest activity but 'family house' does not match typical allied activities.
Defines KCC as designed to facilitate short-term formal credit to farmers through banks, emphasising short-term agricultural credit.
Combine this with basic knowledge that house construction is long-term/non-farm borrowing to suspect it is excluded from short-term KCC purposes.
Presents an exam question listing possible KCC purposes including 'construction of family house and setting up of village cold storage facility' as item 5.
A student can note that this item appears in a multiple-choice list (not affirmed) and compare it to the scheme's stated short-term, crop-focused uses to evaluate plausibility.
Repeats the same exam-style list of purposes for KCC, indicating commonly-debated items (working capital, consumption, post-harvest, machinery, and item 5).
Use the repetition to infer that 'post-harvest expenses' is an accepted short-term KCC purpose and judge whether 'village cold storage' is more likely to be classed under post-harvest or as a capital/infrastructure item.
- [THE VERDICT]: Sitter (if solved via Logic) / Medium (if solved via Memory). Source: Vivek Singh (Ch: Money & Banking) or Nitin Singhania (Ch: Agriculture).
- [THE CONCEPTUAL TRIGGER]: Agriculture > Institutional Credit > Distinction between Production Credit (Crop loans) vs Investment Credit (Term loans).
- [THE HORIZONTAL EXPANSION]: Memorize KCC specifics: 1) Validity: 5 years. 2) Collateral-free limit: ₹1.6 Lakh. 3) Interest Subvention: Available up to ₹3 Lakh (Effective rate 4% if repaid timely). 4) Eligibility: Includes Tenant Farmers, Oral Lessees, and Share Croppers (SHGs/JLGs). 5) Extension: Now covers Fisheries & Animal Husbandry (Working capital limit ₹2 Lakh).
- [THE STRATEGIC METACOGNITION]: When studying financial schemes, categorize the funding nature: Is it OPEX (Operating Expenditure like seeds, diesel, food) or CAPEX (Capital Expenditure like tractors, buildings)? KCC 'Short-term' limit is strictly OPEX. CAPEX falls under the 'Term Loan' component or separate schemes.
KCC covers working capital for maintenance of farm assets, post-harvest expenses, consumption needs and investment credit for allied activities.
High-yield for scheme-based questions asking which activities KCC finances; connects to agricultural credit allocation and helps eliminate wrong options about ineligible uses (e.g., housing, heavy equipment purchase). Knowing permitted uses enables direct answers in MCQs and policy questions.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > iii) Kisan Credit Cards (KCC): > p. 75
KCC is a short-term formal credit instrument intended for crop cultivation and related short-term needs.
Important for questions contrasting loan tenures and types of agricultural finance; links to topics such as crop loans, interest subvention, and credit delivery mechanisms. Mastery aids in distinguishing schemes by tenor and purpose.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > iii) Kisan Credit Cards (KCC): > p. 74
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 9: Agriculture > Government Initiatives so far to Promote Agricultural Credit > p. 322
KCC was designed by NABARD, introduced in 1998, and delivered through commercial, cooperative banks and RRBs.
Useful for institutional and implementation questions about rural finance schemes; connects to NABARD's role, bank involvement, and scheme rollout—common angles in policy and governance questions.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 9: Agriculture > Government Initiatives so far to Promote Agricultural Credit > p. 322
- Geography of India ,Majid Husain, (McGrawHill 9th ed.) > Chapter 9: Agriculture > Rajasthan, Punjab, Madhya Pradesh, Gujarat, Bihar, Andhra Pradesh, and Haryana. > p. 41
KCC provides timely short-term credit for cultivation, post-harvest expenses, consumption needs and some working capital for allied activities.
High-yield for UPSC: questions often ask what KCC covers versus what requires separate investment credit. Mastering KCC's stated purposes helps answer MCQs and policy-type mains/GS questions about agricultural credit instruments and farmer support schemes.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > iii) Kisan Credit Cards (KCC): > p. 74
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > iii) Kisan Credit Cards (KCC): > p. 75
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 9: Agriculture > Government Initiatives so far to Promote Agricultural Credit > p. 322
KCC primarily meets short-term cultivation and working capital needs, while it can also cover limited investment credit (e.g., pump sets, sprayers) distinct from large capital purchases.
Important for distinguishing types of agricultural finance in UPSC papers; enables candidates to judge whether a scheme covers routine/seasonal finance or larger mechanisation/asset purchases, which is a common MCQ and policy analysis theme.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > iii) Kisan Credit Cards (KCC): > p. 74
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > iii) Kisan Credit Cards (KCC): > p. 75
KCC was designed by NABARD and is delivered through public/private banks, cooperatives and RRBs to eligible farmers (owner-cultivators, tenants, sharecroppers).
Useful for questions on institutional mechanisms of rural credit and scheme implementation; links to topics on NABARD, cooperative banks and financial inclusion—recurring themes in prelims and mains.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 9: Agriculture > Government Initiatives so far to Promote Agricultural Credit > p. 322
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > iii) Kisan Credit Cards (KCC): > p. 75
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > 7.54 Indian Economy > p. 240
Kisan Credit Card explicitly includes consumption requirements of farmer households among its permitted purposes.
High-yield for questions on agricultural credit scope: knowing that KCC funds can be used for consumption as well as production helps distinguish it from purely investment schemes; connects to policy debates on diversion of agricultural credit and welfare support.
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > iii) Kisan Credit Cards (KCC): > p. 75
The 'RuPay Kisan Card' is the delivery mechanism. A likely future question: 'Is the KCC limit fungible?' (Yes, the short-term limit is a revolving cash credit, but the term loan component is tied to specific assets). Also, watch out for the 'KCC Saturation Drive' linking PM-KISAN beneficiaries to KCC.
Apply the 'Asset Durability' Logic. The question asks for 'Short-term' credit.
- Item 2 (Combine Harvesters/Tractors) = Heavy Machinery (10+ years life, High Cost).
- Item 5 (Construction of House/Cold Storage) = Infrastructure (20+ years life, High Cost).
These are clearly Long-term/Capital assets. Eliminate any option containing 2 or 5.
- (A) contains 2 & 5 -> Eliminate.
- (C) contains 2, 4, 5 -> Eliminate.
- (D) contains All -> Eliminate.
- Only (B) remains. You didn't even need to know if 'Consumption' was allowed.
Mains GS3 (Inclusive Growth): The inclusion of 'Consumption requirements' (10% of limit) is a critical policy bridge to prevent farmers from falling into the 'Non-Institutional Debt Trap' (moneylenders) for medical/marriage expenses, directly linking credit policy to suicide prevention.