2011 GS Paper I, all questions

UPSC Prelims 2011 · GS Paper I

Question 38: Economy and Social Development

Microfinance is the provision of financial services to people of low-income groups. This includes both the consumers and the self-employed. The service/services rendered under microfinance is/are :

  1. 1.Credit facilities
  2. 2.Savings facilities
  3. 3.Insurance facilities
  4. 4.Fund Transfer facilities

Select the correct answer using the codes given below the lists :

a1 only
b1 and 4 only
c2 and 3 only
d1, 2, 3 and 4

AnswerThe answer is (d).

Microfinance offers poor and low-income people small-scale financial services: credit, meaning small loans often routed through self-help groups; savings; insurance, called micro-insurance; and money transfer or remittance services. All four listed services are therefore part of it. Remember: microfinance is not just microcredit, it covers the whole range of basic financial services for the poor.

  • 1. Small loans are the best-known microfinance service.
  • 2. Safe, small-scale savings facilities are part of it.
  • 3. Micro-insurance is part of it.
  • 4. Remittance and fund transfer services are part of it.

How you could have got this

  1. If you were sure statement 1 is correct, (c) goes: it leaves 1 out.

    What you needed to know: Small loans are the best-known microfinance service.

  2. Then, if you were sure statement 2 is correct, (a) and (b) go: each of them leaves 2 out.

    What you needed to know: Safe, small-scale savings facilities are part of it.

Only (d) is left. You didn’t need statements 3 or 4.

This follows an unofficial answer: UPSC has not published its key for this year, and if that answer is wrong, so is this path.

Which options go is worked out from UPSC’s key and the options, not by a model.

Why each option is right or wrong
  • (a) Credit is one service, but microfinance also covers savings, insurance and transfers.
  • (b) Omits savings and insurance, which are also part of microfinance.
  • (c) Omits credit and fund transfers, which are also part of microfinance.
  • (d) Right: credit, savings, insurance and fund transfer are all microfinance services.

Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2011, General Studies Paper I, Series A. The paper on upsc.gov.in.