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Q24 (IAS/2021) Economy › Schemes, Inclusion & Social Sector › Financial sector schemes Official Key

With reference to WaterCredit', consider the following statements : 1. It puts microfinance tools to work in the water and sanitation sector. 2. It is a global initiative launched under the aegis of the World Health Organization and the World Bank. 3. It aims to enable the poor people to meet their water needs without depending on subsidies. Which of the statements given above are correct?

Result
Your answer: —  Âˇ  Correct: C
Explanation

The correct answer is Option 3 (1 and 3 only). This is based on the following analysis of the statements:

  • Statement 1 is correct: WaterCredit is a pioneering initiative by the global non-profit Water.org. It applies microfinance principles to the water and sanitation sector, providing small, affordable loans to individuals who lack access to traditional credit.
  • Statement 2 is incorrect: WaterCredit was not launched by the WHO or the World Bank. It is an initiative of Water.org, co-founded by Gary White and Matt Damon. While it aligns with global goals, it is not under the "aegis" of these international organizations.
  • Statement 3 is correct: The primary objective is financial empowerment. By providing credit instead of direct aid, it enables the poor to invest in household water connections or toilets, reducing their reliance on government subsidies or charity and ensuring long-term sustainability.

Therefore, since statements 1 and 3 are accurate and statement 2 is factually incorrect, Option 3 is the right choice.

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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. With reference to WaterCredit', consider the following statements : 1. It puts microfinance tools to work in the water and sanitation sec…
At a glance
Origin: Mostly Current Affairs Fairness: Low / Borderline fairness Books / CA: 0/10 ¡ 6.7/10
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This is a classic 'Agency Swap' trap. The question hinges entirely on knowing that 'WaterCredit' is a trademarked initiative of an NGO (Water.org), not a bureaucratic launch by WHO/World Bank. If you rely solely on static books, you will fail; this requires tracking major developmental initiatives in current affairs.

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 the WaterCredit initiative put microfinance tools to work in the water and sanitation sector?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"WaterCredit WaterCredit is an initiative of Water.org that puts microfinance tools to work in the water and sanitation (WASH) sector."
Why this source?
  • Explicitly identifies WaterCredit as an initiative of Water.org.
  • Clearly states that WaterCredit "puts microfinance tools to work" in the water and sanitation (WASH) sector.
  • Provides program output numbers (loans disbursed and people gaining access), showing implementation of microfinance in WASH.
Web source
Presence: 5/5
"is a powerful solution and the first to put microfinance tools to work in the water and sanitation sector."
Why this source?
  • Describes WaterCredit as "the first to put microfinance tools to work in the water and sanitation sector."
  • Notes the program's scale and impact (millions served and many partners), supporting that microfinance is being used in WASH through WaterCredit.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 18. Non-Banking Financial Companies (NBFCs): > p. 85
Strength: 5/5
“Microfinance (micro + finance) is provision of financial services to poor and low-income households. These financial services include small loans/credit, savings, insurance, funds transfer/remittance facilities etc. Microfinance is an economic tool designed to promote financial inclusion which enables the poor and low-income households to come out of poverty, increase their income levels and improve overall living standards. A microfinance loan (Micro-credit) is defined as a collateral-free loan given to a household having annual household income up to ₹3,00,000. For this purpose, the household shall mean an individual family unit, i.e., husband, wife and their unmarried children. All collateral-free loans, irrespective of end use and mode (either through physical or digital channels), provided to low-income households, i.e., households having annual income up to ₹3,00,000, shall be considered as microfinance loans.”
Why relevant

Defines microfinance as provision of small loans, savings, insurance and fund-transfer services to poor households, showing the types of financial tools that could finance household water/sanitation investments.

How to extend

A student could infer that household-level sanitation (e.g., latrine construction) might be financed using microloans described here and then check if WaterCredit offers such small loans for sanitation.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 9: Agriculture > Government Initiatives so far to Promote Agricultural Credit > p. 321
Strength: 4/5
“• No Frill Account: 'No frill' bank account is made available with minimum or nil balance for basic banking. • Promoting Microfinance Institutions (MFIs): MFI works as a vehicle to provide microcredit or small loans to the poor without any collateral. NABARD plays an important role in this by providing re-finance at low interest rates.”
Why relevant

Notes promotion of Microfinance Institutions (MFIs) to provide microcredit to the poor and mentions institutional support (NABARD refinancing) — indicating MFIs are used to channel small loans for developmental needs.

How to extend

One could extend this by checking whether MFIs or refinancing mechanisms have been applied specifically to water/sanitation projects (as WaterCredit would do).

Science ,Class VIII . NCERT(Revised ed 2025) > Chapter 3: Health: The Ultimate Treasure > Odisha — community-led sanitation campaign > p. 37
Strength: 4/5
“In Bhadrak district, Odisha, a community sanitation campaign helped more people build and use toilets. This reduced open defecation significantly, and improved child health, with fewer cases of diarrhoea and infections. What do you infer from this case study? Simple steps like good sanitation can greatly reduce the spread of communicable diseases. Find about such community campaigns held in your location. Share in your class and discuss with your peers about the impact of such initiatives.”
Why relevant

Describes a community sanitation campaign that increased household toilet construction and use, implying demand for small-scale household sanitation investments.

How to extend

A student could link demonstrated local demand for toilets to the need for accessible financing (microloans) and then investigate whether WaterCredit supplies such financing to meet that demand.

INDIA PEOPLE AND ECONOMY, TEXTBOOK IN GEOGRAPHY FOR CLASS XII (NCERT 2025 ed.) > Chapter 4: Water Resources > Highlights of India's National Water Policy 2012 > p. 50
Strength: 3/5
“Some of the salient features of national water policy 2012 are: • Emphasis on the need for a national water framework law, comprehensive legislation for optimum development of inter-State rivers and river valleys.• Water, after meeting the pre-emptive needs for safe drinking water and sanitation, achieving food security, supporting poor people dependent on agriculture for their livelihood and high priority allocation for minimum eco-system needs, be treated as economic good so as to promote its conservation and efficient use.• Adaptation strategies in view of climate change for designing and management of water resources structures and review of acceptability criteria has been emphasized.• A system to evolve benchmarks for water uses for different purposes, i.e., water footprints, and water auditing be developed to ensure efficient use of water.• Removal of large disparity in stipulations for water supply in urban areas and in rural areas has been recommended.• Water resources projects and services should be managed with community participation.”
Why relevant

National water policy emphasises treating water as an economic good and managing water projects with community participation, suggesting funding mechanisms and local financing models may be appropriate for water services.

How to extend

Use this policy idea to reason that microfinance models (community-level loans) could be compatible with water-sector goals and then look for WaterCredit examples aligning microfinance with water policy objectives.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > 8.15 Sustainable Development Goals (SDG) > p. 279
Strength: 3/5
“• Provide Quality Education• Enforce Gender Equality• Improve Clean Water and Sanitation• Affordable and Clean Energy• Create Decent Work and Economic Growth• Increase Industry, Innovation, and Infrastructure• Reduce Inequality• Mobilize Sustainable Cities and Communities• Influence Responsible Consumption and Production• Organize Climate Action• Develop Life Below Water• Advance Life on Land• Guarantee Peace, Justice, and Strong Institutions• Build Partnerships for the Goals Several initiatives have been taken at both the national and the sub national level to mainstream the SDGs into the policies, schemes and programmes of the Government. India has been taking several proactive climate actions to fulfil its obligations "on the basis of equality and in accordance with their common but differentiated responsibilities and respective capabilities".”
Why relevant

SDG listing includes improving clean water and sanitation and building partnerships, indicating development agendas support blended approaches (finance + programs) to reach water/sanitation goals.

How to extend

A student might infer that microfinance partnerships could be one such approach under SDG efforts and then verify whether WaterCredit is an example of such finance–sector partnership for WASH (water, sanitation, hygiene).

Statement analysis

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Statement analysis

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