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Question

Economic growth in India has been a double-edged sword — higher incomes have led to significant declines in poverty, while structural changes in the economy have been accompanied by increased economic inequality. Recent years have seen growing interest in understanding the drivers of rising income inequality in India. However, due to severe data limitations, most of the discussion is focused on the national level. Rural India is home to 70% of the nation’s population. The rural population resides mainly in villages — the 2011 census reports roughly 800 million people living in more than 600,000 villages. Although most of rural India’s workforce remains primarily involved in agriculture, a cumulative process of diversification through increasing importance of non-farm activities has been taking place in recent decades. One study observes this phenomenon and its implications in Palanpur over a period of six decades from 1957–58 to 2015. While conventional, nationally representative surveys are not able to monitor inequality trends at the village level, our surveys measure household incomes for the entire village on five separate occasions spanned by the survey period. We employ a measure of income that is both highly detailed and has benefited from extensive cross-checking and validation. (Source- UNU)

Consider the following Statements about:

(1) Self-Help Groups (henceforth SHGs) have emerged to fill the gap in the formal credit system because the formal credit delivery mechanism has not only proven inadequate but has also not been fully integrated into the overall rural social and community development.

(2) SHGs take direct retail loans from NABARD.

(3) SHG-BLP Programme is being run successfully by the State Bank of India.

Which of the above statement(s) is/are CORRECT?

A 1 only Correct Answer Incorrect Answer
B 2 only Correct Answer Incorrect Answer
C Both 1 and 2 Correct Answer Incorrect Answer
D None of the above Correct Answer Incorrect Answer
E 1 & 3 Correct Answer Incorrect Answer

Solution

Self-Help Groups (henceforth SHGs) have emerged to fill the gap in the formal credit system because the formal credit delivery mechanism has not only proven inadequate but has also not been fully integrated into the overall rural social and community development. Since some kind of collateral is required, vast proportion of poor rural households were automatically out of the credit network. The SHGs promote thrift in small proportions by a minimum contribution from each member. From the pooled money, credit is given to the needy members to be repayable in small instalments at reasonable interest rates. SHG-BLP (SHG Bank Linkage) Programme is run by NABARD.

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