Consider the following programmes : 1. Credit Linked Capital Subsidy Scheme 2. Micro Finance Programme 3. National Manufacturing Competitiveness Programme 4. Cluster Development Programme What is common in the above programmes ?
- (a)They are related to improving agriculture
- (b)They are programmes related to Micro, Small and Medium Enterprises
- (c)They are programmes to improve large scale industries
- (d)They are programmes to improve the traditional cottage industries
Answer
Why
Correct — B, (b) They are programmes related to Micro, Small and Medium Enterprises.
All four named programmes are run by the MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES, and each attacks a different constraint that a small manufacturer runs into.
1. CREDIT LINKED CAPITAL SUBSIDY SCHEME — the money constraint on modernising. It pays an upfront capital subsidy on institutional finance taken by a small unit to install well-established and improved technology in specified sub-sectors, so that a unit which cannot fund a machine out of its own reserves can still upgrade. 2. MICRO FINANCE PROGRAMME — the access constraint at the very bottom of the size range. It works through the Small Industries Development Bank of India to channel credit towards micro enterprises that fall below the threshold at which ordinary bank lending is available to them. 3. NATIONAL MANUFACTURING COMPETITIVENESS PROGRAMME — the capability constraint. It is an umbrella under which a set of components address the things a small manufacturer usually cannot buy in for itself: better shop-floor practice, design, quality standards and certification, technology support and help with intellectual property. 4. CLUSTER DEVELOPMENT PROGRAMME — the scale constraint. Small firms of the same trade concentrated in one place are organised so that facilities none could afford alone — testing, common processing, effluent treatment, upgraded infrastructure — can be provided to all of them together.
READ THE CEILINGS AND THE ANSWER IS FORCED. The subsidy in the first programme is calculated on institutional finance measured in tens of lakhs, and the fourth is built around a common facility that a single firm could not fund. Those are the dimensions of small enterprise support; a large-industry programme would not be shaped that way.
THE UNIFYING IDEA is the standard diagnosis of what holds Indian small industry back — inadequate credit, obsolete technology, weak marketing and an inability to capture scale economies — and each programme in the list answers one item on that diagnosis.
On the printed page the question sentence comes AFTER the four numbered programmes and there is no line inviting a code; the four options are prose statements rather than numeric combinations, so the item asks what the list has in common, not which members of it are correct.
Why the others are wrong
- (a)They are related to improving agriculture — None of the four is an agriculture programme, and the vocabulary is what gives it away. 'Capital subsidy for technology upgradation', 'manufacturing competitiveness' and 'cluster development' are the language of industrial units, not of cultivation. Agricultural support in India runs through a different ministry and a different set of instruments — minimum support prices and procurement, irrigation and micro-irrigation, soil health and fertiliser subsidy, crop insurance, and credit through the Kisan Credit Card and NABARD. The word most likely to mislead is 'cluster', which does appear in agriculture and horticulture programmes as well; but the cluster programme named here is the Micro and Small Enterprises one, and it sits alongside three unmistakably industrial schemes.
- (c)They are programmes to improve large scale industries — The exact opposite of the case, and the option a candidate picks who recognises the industrial vocabulary but not the scale. Large firms are precisely the ones that do NOT need these instruments: they can raise capital on their own account, employ their own quality and design staff, and build their own testing and effluent facilities. Every one of these programmes exists because a small unit cannot. The give-away is in the numbers — a capital subsidy computed on institutional finance in the tens of lakhs is not a meaningful intervention for a large enterprise, and a shared common facility centre is only worth building for firms too small to own one each. The state's dealings with large industry take quite different forms, such as industrial licensing, foreign investment policy and infrastructure provision.
- (d)They are programmes to improve the traditional cottage industries — The closest of the three and the most instructive, because traditional and village industry IS supported by the same ministry — but through a SEPARATE line of programmes, which is exactly why this option is wrong. Khadi and village industries are handled through the Khadi and Village Industries Commission, and traditional artisan trades through the Scheme of Fund for Regeneration of Traditional Industries, which organises artisans and traditional industries into clusters of their own. The four programmes listed here are aimed at the modern small manufacturing enterprise: institutional bank finance, technology upgradation in specified engineering and manufacturing sub-sectors, quality certification and design. Handloom, handicraft, coir and khadi units are supported, but not by these four.
Concept
MICRO, SMALL AND MEDIUM ENTERPRISES are a statutory category in India, created by the MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006. The Act replaced the older 'small scale industry' idea with three defined tiers and gave them a legal framework covering classification, a filing of particulars, and provisions on delayed payments to small suppliers.
HOW THEY ARE CLASSIFIED. The Act's original test looked only at INVESTMENT — in plant and machinery for a manufacturing enterprise, in equipment for a service enterprise — and set different ceilings for the two. That was the test in force when this paper was set. It was replaced by COMPOSITE CRITERIA notified in June 2020 and effective from 1 July 2020, which combine investment with annual TURNOVER and apply one common scale to manufacturing and services alike:
Micro — investment up to ₹ 1 crore and turnover up to ₹ 5 crore Small — investment up to ₹ 10 crore and turnover up to ₹ 50 crore Medium — investment up to ₹ 50 crore and turnover up to ₹ 250 crore
Both conditions must be satisfied, and exceeding either one moves the enterprise up a tier. The composite test was adopted partly because an investment-only ceiling penalised a firm for modernising: buying a better machine could cost it its classification and the benefits attached to it.
WHY THE SECTOR IS GIVEN SO MUCH POLICY ATTENTION. It is the second largest employer in the country after agriculture, it is labour-intensive and geographically dispersed, and it accounts for a substantial share of manufacturing output and of exports. It is also the part of the economy least able to help itself, because the constraints on a small unit are structural.
THE FOUR CLASSIC CONSTRAINTS, and the instrument each has generated:
credit — priority sector lending norms, the Credit Guarantee Fund Trust for collateral-free loans, refinance through SIDBI, and micro finance for the smallest units technology — the Credit Linked Capital Subsidy Scheme, and the technology and quality components of the National Manufacturing Competitiveness Programme scale — the cluster development approach, providing common facilities and infrastructure to a concentration of like firms market access — public procurement preference, marketing assistance and support for participation in trade fairs
THE CLUSTER APPROACH deserves its own note, because it is the ministry's stated strategy rather than merely one scheme. Indian small industry is naturally clustered by trade and place, and a cluster can support a common facility centre, shared testing and treatment plants and upgraded infrastructure that no member firm could justify alone.
This is a WHAT DO THEY HAVE IN COMMON item, and it is a distinct format worth recognising. It gives four proper names and asks for the category that contains all four, with the options offering four different categories rather than combinations of the numbered items. That means partial knowledge is enough: identifying any ONE programme confidently, and checking that the identification is consistent with the other three, settles it.
It also means the failure mode is different from a normal statement item. There is nothing to adjudicate statement by statement; the risk is choosing a category that fits two of the four and not the rest. Test a candidate category against the WHOLE list — 'Credit Linked Capital Subsidy' is not agricultural under any reading, and 'National Manufacturing Competitiveness' is not a cottage-industry phrase.
On the printed page the question sentence follows the numbered list and no codes line is offered, which is this paper's habit on about a dozen items. The list is the subject of the question rather than a set of claims to be judged.
EPFO papers ask about government schemes constantly, and the reliable way to prepare is by MINISTRY and by PROBLEM rather than by memorising names in isolation. Knowing that the Ministry of MSME owns credit, technology, cluster and marketing interventions, that traditional and village industry sits on a separate line through the Khadi and Village Industries Commission and the traditional-industries fund, and that agriculture is a different ministry entirely, answers a whole family of questions of which this is one instance. It also guards against the commonest error on scheme questions, which is attaching a real scheme to the wrong ministry.
Key facts
- All four programmes named — the Credit Linked Capital Subsidy Scheme, the Micro Finance Programme, the National Manufacturing Competitiveness Programme and the Cluster Development Programme — are run by the Ministry of Micro, Small and Medium Enterprises.
- The Credit Linked Capital Subsidy Scheme pays an upfront capital subsidy on institutional finance taken by a small unit to install well-established and improved technology in specified sub-sectors.
- The National Manufacturing Competitiveness Programme is an umbrella under which components address shop-floor practice, design, quality standards and certification, technology support and intellectual property.
- The Micro and Small Enterprises Cluster Development Programme applies the cluster approach — common facility centres and infrastructure development for a concentration of like firms.
- MSMEs are statutory categories under the Micro, Small and Medium Enterprises Development Act, 2006, which replaced the earlier 'small scale industry' concept.
- Composite criteria notified in June 2020 and effective from 1 July 2020 classify enterprises by investment AND turnover on one scale for manufacturing and services: Micro ₹1 crore and ₹5 crore, Small ₹10 crore and ₹50 crore, Medium ₹50 crore and ₹250 crore.
- The earlier test, in force when this paper was set, looked at investment alone and set different ceilings for manufacturing and for service enterprises.
- Traditional and village industry is supported separately, through the Khadi and Village Industries Commission and the Scheme of Fund for Regeneration of Traditional Industries.
Study next
Common traps
- Being caught by the word 'cluster', which appears in agricultural and horticultural programmes too; the cluster programme here is the Micro and Small Enterprises one.
- Assuming that because the ministry also supports khadi and village industry, every scheme it runs is a traditional-industry scheme. Those run on a separate line.
- Attaching a real scheme to the wrong ministry, which is the single commonest error on scheme questions.
- Quoting the pre-2020 investment-only ceilings as though they were current, or the 2020 composite ceilings as though they applied when this paper was set.
- Forgetting that the 2020 criteria require BOTH conditions — exceeding either investment or turnover moves an enterprise into the next tier.
- Treating a category question as a statement-adjudication question. Here the options are four categories, and the test is whether one of them fits all four names.
Government schemes are a standing feature of EPFO general ability papers, and they come in three shapes. The first names a scheme and asks what it does or which ministry runs it. The second lists several schemes and asks what they have in common, which is this item. The third gives numbered statements about one scheme and asks which are correct, usually mixing a correct objective with a wrong ministry, a wrong beneficiary or a wrong ceiling. Preparing scheme by scheme is slow and fragile; preparing by ministry and by the problem being solved is faster and answers all three shapes. For the MSME sector in particular, hold the four constraints — credit, technology, scale and market access — and the flagship instrument attached to each.
Related PYQs
EPFO_APFC_2016_Q20Special Economic Zones (SEZ) are developed to
- (a) Generate additional economic activity throughout the country
- (b) Beautify suburban areas
- (c) Upgrade the facilities in the countryside
- (d) Promote investment from domestic and foreign sources
Answer(d) Promote investment from domestic and foreign sources
What Special Economic Zones are developed to do — the same paper's other industrial-policy instrument item, and likewise answered by asking which constraint the instrument was created to relieve.
EPFO_APFC_2023_Q60Which of the following are the major objectives of setting up of Biotechnology Industry Research Assistance Council (BIRAC)? 1. To foster innovations and entrepreneurship 2. To promote affordable innovations in key social sectors 3. To empower startups and small and medium enterprises 4. To encourage young investigators for entrepreneurial and managerial development in SMEs in biotechnology Select the correct answer using the code given below.
- (a) 1, 2 and 3 only
- (b) 1 and 4 only
- (c) 2, 3 and 4 only
- (d) 1, 2, 3 and 4
Answer(d) 1, 2, 3 and 4
The objectives of BIRAC on the later APFC paper — a scheme-objectives item of exactly this family, where the work is matching an institution to the problem it was set up to solve.
EPFO_EOAO_2017_Q54Startup Hubs are agreed to be set up in 1. IIITs 2. IISERs 3. NITs 4. Central Universities Select the correct answer using the code given below.
- (a) 1, 2 and 3
- (b) 1 and 4 only
- (c) 3 and 4 only
- (d) 1, 3 and 4
Answer(a) 1, 2 and 3
Where Startup Hubs were to be set up — another scheme-mapping item, testing whether a programme has been learned with its owning institution attached rather than as a bare name.
Practice
- practice — not a real PYQ
Under the composite criteria notified in 2020, an enterprise is classified as a MICRO enterprise if its investment in plant and machinery or equipment does not exceed ₹ 1 crore and its annual turnover does not exceed
- (a)₹ 2 crore
- (b)₹ 5 crore
- (c)₹ 10 crore
- (d)₹ 50 crore
Answer(b) ₹ 5 crore — the 2020 criteria pair each investment ceiling with a turnover ceiling and require both to be satisfied: Micro at ₹ 1 crore and ₹ 5 crore, Small at ₹ 10 crore and ₹ 50 crore, Medium at ₹ 50 crore and ₹ 250 crore. The figure ₹ 50 crore is the Small tier's turnover ceiling, offered here to catch a candidate who remembers the numbers but not which tier they belong to.
- practice — not a real PYQ
The Scheme of Fund for Regeneration of Traditional Industries (SFURTI) is intended mainly to
- (a)provide a capital subsidy for technology upgradation in medium-sized engineering units
- (b)organise traditional industries and artisans into clusters and make them competitive
- (c)guarantee export credit extended to large manufacturing firms
- (d)provide irrigation infrastructure to farmer producer organisations
Answer(b) organise traditional industries and artisans into clusters and make them competitive — it is the Ministry of MSME's separate line for traditional and village industry, distinct from the modern small-enterprise programmes such as the Credit Linked Capital Subsidy Scheme. Recognising that the ministry runs these two lines side by side is what separates the correct answer on the parent question from its most tempting distractor.