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UPSC Essentials | Daily subject-wise quiz : Economy MCQs on Prompt Corrective Action, crop loan and more (Week 109)

Written by Meera Deshpande

Hello, aspirants! Welcome back to your weekly dose of UPSC Essentials, where we break down crucial topics to supercharge your Civil Services Examination preparation. This week, our focus for the daily subject-wise quiz, specifically Week 109, zeroes in on vital areas of the Indian Economy. We'll be diving deep into Multiple Choice Questions (MCQs) centered around concepts like the Prompt Corrective Action (PCA) framework, intricacies of crop loans, and other pertinent economic themes. Mastering these can significantly boost your score in both Prelims and Mains.

kam sabdo me kahein to, this article unpacks key topics from the UPSC Essentials Week 109 Economy quiz, detailing Prompt Corrective Action and crop loan mechanisms, to enhance your understanding for the civil services exam.

Understanding the Landscape: Why Economy MCQs Matter

The Economy section of the UPSC syllabus is dynamic and application-based. It requires not just a theoretical understanding but also a keen awareness of current events and their economic implications. Daily quizzes, like the one featured in Week 109, are an excellent tool for regular revision and for testing your grasp of complex topics. They simulate the exam environment and help you identify areas that need more attention. For comprehensive preparation strategies and daily updates, aspirants often find it helpful to explore resources like those available on Asarkari. For more updates, visit https://asarkari.com.

Decoding Prompt Corrective Action (PCA)

One of the significant topics likely to feature in this week's economy MCQs is the Prompt Corrective Action (PCA) framework. So, what exactly is PCA?

The PCA framework is a supervisory tool implemented by the Reserve Bank of India (RBI) for banks that exhibit poor financial health. When a bank's financial metrics fall below certain critical thresholds, the RBI can impose restrictions to prevent further deterioration and ensure the stability of the financial system. These thresholds are typically based on parameters like Capital to Risk-weighted Assets Ratio (CRAR), Net Non-Performing Assets (NPA), and Tier 1 Leverage Ratio. Recently, Return on Assets (RoA) has also been a keenly watched indicator.

Questions on PCA in the UPSC exam could revolve around:

• The objectives of the PCA framework.
• The specific triggers or parameters that invoke PCA.
• The types of restrictions that can be imposed on banks under PCA (e.g., restrictions on dividend distribution, branch expansion, lending to certain sectors, or even caps on management compensation).
• Recent instances of banks being placed under or taken out of the PCA framework.
• The impact of PCA on a bank's operations and its overall effect on the banking sector and credit availability in the economy.

Understanding the nuances of the PCA framework is crucial, as it reflects the RBI's commitment to maintaining a robust and resilient banking sector, which is a cornerstone of economic stability. Its relevance has been consistently highlighted in economic surveys and financial stability reports, making it a hot topic for UPSC Economy MCQs.

Navigating the Complexities of Crop Loans

Another pivotal area for Indian Economy MCQs is crop loans. Agriculture remains the backbone of the Indian economy, and access to timely and affordable credit is paramount for farmers. Crop loans are designed to meet the short-term credit requirements of farmers for seasonal agricultural operations.

Key aspects of crop loans that aspirants should focus on include:

• Kisan Credit Card (KCC) Scheme: This is a flagship scheme providing farmers with hassle-free access to credit. Understanding its features, eligibility criteria, and the types of credit covered (short-term crop loans, post-harvest expenses, consumption requirements of farmer households, etc.) is important.
• Interest Subvention Scheme: The government often provides interest subvention to make crop loans more affordable. Aspirants should be aware of the current rates of subvention, the conditions under which it is provided (e.g., prompt repayment), and the role of NABARD in facilitating these schemes. For instance, short-term crop loans up to ₹3 lakh are often provided at a concessional interest rate, with further subvention for timely repayment.
• Scale of Finance: This refers to the amount of loan per unit area (e.g., per acre or per hectare) fixed by District Level Technical Committees (DLTC) for different crops. Understanding how this is determined can be relevant.
• Challenges in Agricultural Credit: Issues like regional disparities in credit disbursal, the problem of informal credit sources, loan waivers and their economic impact, and the need for financial inclusion are also important dimensions.

MCQs on crop loans might test your knowledge on recent policy changes, the institutional framework for agricultural credit (involving commercial banks, cooperative banks, and Regional Rural Banks - RRBs), and the impact of these loans on agricultural productivity and farmers' welfare. The government's focus on doubling farmers' income often brings policies related to agricultural finance, including crop loans, into the spotlight, making them perennially important for the UPSC exam.

"And More": Broadening Your Economic Horizon

The "and more" in the quiz title suggests that Week 109 will likely cover a broader spectrum of economic topics beyond just PCA and crop loans. This could include concepts related to inflation, monetary policy tools, fiscal policy, international trade, balance of payments, various economic surveys and reports, or recent government schemes impacting the economy. To tackle these diverse questions effectively, a consistent study routine, thorough understanding of fundamental economic principles, and staying updated with current economic affairs are indispensable.

Engaging with daily subject-wise quizzes helps in consolidating knowledge, improving time management skills, and developing the acumen to tackle tricky questions. Remember, consistency is key in UPSC preparation.

Conclusion: Strengthening Your Economic Foundations

The UPSC Essentials daily subject-wise quiz for Week 109 offers a valuable opportunity for aspirants to test their understanding of critical economic concepts like Prompt Corrective Action and crop loan mechanisms. By regularly engaging with such quizzes and delving deeper into the underlying principles, candidates can build a strong foundation in the Indian Economy, a subject that carries significant weightage in the Civil Services Examination.

Keep practicing, stay updated, and make the most of these learning tools to navigate your UPSC journey successfully. Your dedication today will shape your success tomorrow.

All the best!

Team Asarkari

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