Previous Year Question
Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes?
Working capital for maintenance of farm assets
Purchase of combine harvesters, tractors and mini trucks
Consumption requirements of farm households
Post-harvest expenses
Construction of family house and setting up of village cold-storage facility
Select the correct answer using the code given below:
1, 2 and 5
1, 3 and 4
2, 3, 4 and 5
1, 2, 3, 4 and 5
Correct Answer: B
Detailed Solution
The Kisan Credit Card Scheme was introduced in 1998 to provide farmers with simple, timely and adequate institutional credit for crop production and associated requirements. NABARD formulated its Model Scheme.
Statement 1 is correct. Working capital for maintaining farm assets and carrying out allied agricultural activities forms part of short-term credit requirements under KCC.
It may include expenditure on seeds, fertilisers, pesticides, irrigation, routine repair of farm equipment and operational requirements of dairy, fisheries and other allied activities.
Statement 2 is incorrect. Purchase of expensive assets such as combine harvesters, tractors and mini trucks constitutes capital investment. Such purchases generally require term loans or investment credit and are not short-term working-capital requirements for crop production.
Eligible investment credit may be incorporated into the overall KCC limit, but the question specifically asks about short-term credit support.
Statement 3 is correct. Limited consumption requirements of the farmer’s household are included in short-term KCC credit. This provision helps prevent farmers from resorting to high-cost informal borrowing for essential household expenditure.
Statement 4 is correct. Post-harvest credit can cover expenditure relating to storage, transportation, sorting, grading and marketing of produce. It can reduce the pressure on farmers to undertake distress sales immediately after harvesting.
Statement 5 is incorrect. Construction of a family house is not a short-term agricultural-credit requirement. Similarly, establishing a village cold-storage facility is a substantial infrastructure and capital-investment project rather than an ordinary KCC short-term credit requirement.