UPPSC 2025 Prelims GS Paper-I · Question 37 of 150

Correct — C, Only 3 — the Ministry of Finance. Pradhan Mantri Mudra Yojana is a credit scheme, and in the Government of India credit is the business of the Department of Financial Services in the Ministry of Finance, which administers PMMY. The delivery machinery points the same way: the scheme, launched in April 2015, works through MUDRA — the Micro Units Development and Refinance Agency — which was set up as a wholly owned subsidiary of the Small Industries Development Bank of India, and SIDBI itself falls under the jurisdiction of the Ministry of Finance. MUDRA does not lend to the borrower directly; it refinances banks, non-banking financial companies and micro-finance institutions, which extend collateral-free loans to non-corporate, non-farm micro and small enterprises in three slabs — Shishu, Kishor and Tarun. Statements 1 and 2 are not merely secondary, they are wrong: neither the Ministry of Corporate Affairs nor the Ministry of Rural Development has any administrative role in the scheme.

• (a)1 and 2 — It takes the two ministries that do not run the scheme and leaves out the one that does. The Ministry of Corporate Affairs administers company law — incorporation, the registrar of companies, the LLP framework and corporate governance — and PMMY's borrowers are exactly the units that are not incorporated; the scheme's own definition of its target is the non-corporate, non-farm micro and small enterprise. The Ministry of Rural Development runs livelihood and wage-employment programmes such as MGNREGS, DAY-NRLM and PMAY-Gramin, all of them rural by definition, whereas a Mudra loan is a bank loan available to a micro enterprise whether it is in a village or a city.
• (b)2 and 3 — Half right, and that is what makes it dangerous. The Ministry of Finance does belong here, but the Ministry of Rural Development does not: it has no administrative charge of PMMY. The confusion arises because MUDRA lending and the rural livelihoods mission both reach very small borrowers, but they run on different rails — one is refinanced bank credit under the Department of Financial Services, the other is a self-help-group and subsidy-based programme under Rural Development.
• (d)Only 1 — This puts the scheme entirely with the Ministry of Corporate Affairs, which has no role in it at all. The word that misleads is 'Units' in Micro Units Development and Refinance Agency — it sounds corporate, but a 'micro unit' here means a hawker, a shopkeeper, a small manufacturer or a service provider outside the corporate form, and MUDRA is a financial institution under SIDBI, not a registry of companies.

The question is really about how the Union government is organised, not about the scheme's benefits. Every flagship programme has an administrative ministry, and the reliable way to identify it is to ask what instrument the programme uses. If the instrument is credit — a loan, a guarantee, a refinance line, an interest subvention — the administrative home is the Department of Financial Services in the Ministry of Finance, which is also the department that owns the government's relationship with public sector banks, insurers and the development finance institutions. Pradhan Mantri Mudra Yojana is pure credit: it does not transfer money to the beneficiary, it makes an existing lender willing to give a very small, collateral-free loan by refinancing and, where applicable, guaranteeing it. MUDRA, the institution created to carry that out, sits under SIDBI, which is itself in the Ministry of Finance's jurisdiction.

UPPSC likes the scheme-to-ministry pairing because it is memorised loosely. The trick is to reason from the instrument rather than from the beneficiary. Micro-entrepreneurs are poor, and poverty makes candidates reach for Rural Development or for a welfare ministry; but the beneficiary does not decide the file. Ask instead: is money being lent, or given? Mudra lends. The second guard is the delivery agency — MUDRA under SIDBI, and SIDBI under the Ministry of Finance — which points at the same ministry from a different direction. Keep a short list of the same kind: Stand-Up India and the Jan Dhan Yojana under the Department of Financial Services; PM-KISAN under Agriculture; MGNREGS and PMAY-Gramin under Rural Development; PMAY-Urban under Housing and Urban Affairs.

• Pradhan Mantri Mudra Yojana was launched in April 2015 and is administered by the Department of Financial Services, Ministry of Finance
• MUDRA — Micro Units Development and Refinance Agency — was formed as a wholly owned subsidiary of SIDBI, and SIDBI operates under the jurisdiction of the Ministry of Finance
• MUDRA refinances rather than lends directly; the actual loan comes from a bank, an NBFC or a micro-finance institution
• Loans are collateral-free and go to non-corporate, non-farm micro and small enterprises in manufacturing, trading and services
• The slabs are Shishu (up to ₹50,000), Kishor (₹50,000 to ₹5 lakh) and Tarun (₹5 lakh to ₹10 lakh). A separate TARUN PLUS category, effective 24 October 2024, covers ₹10 lakh to ₹20 lakh — but only for borrowers who have already availed and fully repaid an earlier Tarun loan; the plain Tarun slab still tops out at ₹10 lakh
• SIDBI itself was established on 2 April 1990 by an Act of Parliament as the apex institution for the micro, small and medium enterprise sector

• Reasoning from the beneficiary rather than the instrument — poor borrowers do not make a credit scheme a rural-development scheme
• Reading 'Micro Units' as a corporate-registry expression and drifting towards the Ministry of Corporate Affairs
• Assuming MUDRA lends directly to the entrepreneur; it is a refinance agency working through banks, NBFCs and MFIs

UPPSC asks the administrative home of a scheme in a plain statement-code format, while UPSC prefers to test what the scheme actually does — the aim of PMMY, or a pairs question matching several programmes to their ministries at once.

• practice — not a real PYQ

  MUDRA, the agency behind the Pradhan Mantri Mudra Yojana, was set up as a wholly owned subsidiary of

  • (a)the Reserve Bank of India
  • (b)NABARD
  • (c)SIDBI
  • (d)the National Housing Bank

  Answer(c) SIDBI — the Small Industries Development Bank of India, which itself falls under the Ministry of Finance.

• practice — not a real PYQ

  Under the Pradhan Mantri Mudra Yojana, a collateral-free loan of up to ₹50,000 falls in which category?

  • (a)Shishu
  • (b)Kishor
  • (c)Tarun
  • (d)Bal

  Answer(a) Shishu — Kishor covers ₹50,000 to ₹5 lakh and Tarun the slab above it; there is no 'Bal' category.