Agriculture and Allied Sectors (Part -V)

Total Questions: 22

1. In the Union Budget 2011-12, the effective rate of interest for farmers on timely repayment of bank loan is : [U.P.P.C.S. (Pre) 2011]

(a) 7 percent
(b) 6 percent
(c) 4 percent
(d) 3 percent

Correct Answer: (c) 4 percent

Solution:The Union Government launched the Interest Subvention Scheme in 2006-07, to provide short-term agricultural loans up to Rs. 3 lakhs at an annual interest rate of 7% for farmers engaged in agriculture and allied activity. Initially, additional 2% subvention was also provided for prompt and timely repayment of loans. In the Union Budget 2011-12, additional interest subvention was increased from 2% to 3% for farers on timely payment of bank loan. Thus, the effective interest rate became 7-3-4%. This interest subvention scheme was modified in 2022. Under the modified scheme, lending institutions such as public sector banks, regional rural banks, or cooperative banks are provided with 1.5% interest subvention from 2022-23 to 2024-25. However, farmers will continue to avail short term (upto one year) agricultural credit upto Rs. 3 lakh at interest rate of 4% per annum while repaying the loan in time. This benefit would not accrue to those farmers who repay their agricultural loans after one year of availing such loans.

2. Which of the following is not included in running cost capital of a farm? [U.P.R.O./A.R.O. (Pre) 2014]

(a) Seed
(b) Fertilizer
(c) Irrigation water
(d) Land revenue

Correct Answer: (d) Land revenue

Solution:Land revenue is not included in the running cost capital of a farm whereas cost of seeds, fertilizers and irrigation water will be included in it, because they are al part of the agricultural input.

3. Which One of the following does not contribute to the rural economy? [U.P. Lower Sub. (Pre) 2013]

(a) Pastoralism
(b) Cottage industry
(c) Practice f lending personal money
(d) Accessibility of goods tools

Correct Answer: (c) Practice f lending personal money

Solution:Availability of animal husbandry (pastoralism), cottage industries and good equipments are the main contributors in the rural economy. Rather than other three the contribution of option (c) is very limited in the rural economy. Therefore, option (c) is the most suitable answer.

4. Which of the following is the main principle of agriculture finance? [U.P.P.C.S. (Mains) 2016]

(a) Purpose
(b) Person
(c) Productivity planning
(d) All of the above

Correct Answer: (d) All of the above

Solution:The main principle of agricultural finance includes objective (purpose), person and Productivity planning.

5. Which is not a source of agricultural finance in India? [B.P.S.C (Pre) 2000]

(a) Co-operative Societies
(b) Commercial Banks
(c) Regional Rural Banks
(d) None of these

Correct Answer: (d) None of these

Solution:The source of agricultural finance in India are divided into two categories :

A. Institutional sources, in which the prominents are :

(1) Cooperative Societies and Banks

(2) Commercial Banks

(3) Regional Rural Banks

(4) Government

B. Non-Institutional source : Private money-lenders, relatives, businessman, zamindar etc.

6. The farmers are provided credit from a number of sources for their short-and long-term needs. The main sources of credit to the farmers includes: [I.A.S. (Pre) 1999]

(a) the Primary Agricultural Cooperative Societies, Commerical Banks, RRB and private money-lenders
(b) the NABARD, RBI, Commercial Banks and private money-lenders
(c) the District Central Cooperative Banks (DCCB), The Lead Banks, IRDP and JRY
(d) the Large Scale Multi-purpose Adivasis Programme, DCCBM, IFFCO and Commercial Banks

Correct Answer: (a) the Primary Agricultural Cooperative Societies, Commerical Banks, RRB and private money-lenders

Solution:The source of agricultural finance in India are divided into two categories :

A. Institutional sources, in which the prominents are :

(1) Cooperative Societies and Banks

(2) Commercial Banks

(3) Regional Rural Banks

(4) Government

B. Non-Institutional source : Private money-lenders, relatives, businessman, zamindar etc.

7. Consider the following statements : [I.A.S. (Pre) 2020]

1. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks.

2. One of the most important functions of DCCBs is to provide funds to the Primary Agriculture Credit Societies.

Which of the statement given above is/are correct?

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Correct Answer: (a) 1 only

Solution:A District Co-operative Central Bank (DCCB) is a cooperative bank operating at district level in various parts of India. They were established to provide banking to the rural hinterland for the agricultural sector. As per the RBI data released in September, 2023, in the year 2022-23 (P) the share in total credit flow to agriculture of all cooperative Banks/Institutions (SICBs, DCCBs and PACS) is only 10.80%, as compared to 76.86% of Commercial Banks and 12.34% of Regional Rural Banks (RRBs). Hence, statement (1) is incorrect.

Functions of DCCBs are -

• To meet the credit requirements of member societies

• To maintain close and continuous contact with 'Primary Agricultural Credit Societies' (PACS) and provide funds and leadership to them.

• To superwise and impact the PACS.

Hence, statement (2) is correct.

8. Long-term agricultural credit is provided by : [U.P.P.C.S. (Mains) 2014]

(a) Primary Cooperative Society
(b) District Cooperative Bank
(c) Land Development Bank
(d) State Cooperative Bank

Correct Answer: (c) Land Development Bank

Solution:Long-term agricultural credit is provided by separate cooperative banks called Land Development Bank. They were previously Known as Land Mortgage Banks.

9. Which one of the following is the largest source of agriculture credit in India in recent years ? [U.P.P.C.S. (Mains) 2006*]

(a) Commercial Banks
(b) Co-operative Banks
(c) Regional Rural Banks
(d) Land Development Banks

Correct Answer: (a) Commercial Banks

Solution:As per the NABARD's Annual Report 2021-22, Commercial Banks accounts for about three-fourth of the total institutional credit (short-term plus long-term) flow to agriculture during 2021-22. The share of Commercial Banks in total agriculture credit flow increased from 53.7% in 1999-2000 to 76.86% in 2022-23 (P), while the share of Co-operative Banks/ Institutions declined from 39.5% to 10.80% during this period. Regional Rural Banks (RRBs) also have expanded their share of institutional credit flow to agriculture sector from 6.9% to 12.34% between this period.

10. Followings are the source of Institutional credit to agriculture in India : [U.P.P.C.S. (Spl.) (Mains) 2004]

1. Co-operative Banks

2. Regional Rural Banks

3. Commercial Banks

Which one is the correct sequence is descending order of their importance?

(a) 1, 3, 2
(b) 2, 1, 3
(c) 3, 2, 1
(d) 3, 1, 2

Correct Answer: (d) 3, 1, 2

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