What is the main goal of the Udyam Kranti Yojna ?

Question

UnlockIAS · Accepted Answer

Correct — B, collateral-free credit for self-employment. Madhya Pradesh's Mukhyamantri Udyam Kranti Yojana is a credit-linked self-employment scheme run by the state's MSME Department. A young applicant who wants to set up a manufacturing unit or a service enterprise gets a bank loan without pledging collateral; the state then bears part of the cost of that loan — an interest subsidy of 3% a year and the credit-guarantee (CGTMSE) fee — for up to seven years. The scheme's whole design is about access to institutional credit for a first enterprise.

Why the other options are wrong — (a) Power tariff concessions to industry are a separate industrial-policy instrument. Udyam Kranti Yojana delivers a subsidised loan, not free electricity.  (c) Tax holidays for recognised startups are a central income-tax matter under the Startup India framework, not the object of a state credit scheme.  (d) Entrepreneurship and skill training run through separate skill-development and EDP programmes. The defining benefit here is the collateral-free loan plus subsidy, not the training.

Concept: The binding constraint for a first-generation entrepreneur is not the idea but the security a bank asks for. Two policy tools solve it: a credit guarantee (a trust such as CGTMSE stands behind the loan, so the bank does not need collateral) and an interest subvention (the state pays part of the interest, cutting the effective rate). Mukhyamantri Udyam Kranti Yojana bundles both and routes the loan through commercial banks, so the state does not lend directly — it de-risks and cheapens the bank's lending.

State PCS 2025 Q38 — Madhya Pradesh GK PYQ with Answer

State PCS 2025 Q38 — Madhya Pradesh GK PYQ with Answer