What is the crucial message conveyed in the passage ?
- (a) Establish more banks
- (b) Increase the Gross Domestic Product (GDP) growth rate
- (c) Increase the interest rate of bank deposits
- (d) Promote financial inclusion ✓ UPSC's answer
Why the answer is (d)
• The passage states that access to safe and reliable financial institutions is fundamental for mobilizing savings but is not always available to all people, especially in rural areas of developing countries like India. - It highlights that poor households without access to formal savings mechanisms face immediate spending temptations and cannot manage cash flow volatility effectively. - The core issue identified is the lack of access to formal financial systems for a significant portion of the population. - Therefore, the crucial message is the need to ensure that all individuals, including the poor and rural populations, have access to these financial services. - This aligns directly with the concept of promoting financial inclusion, which aims to make financial services accessible to all segments of society.
Why the other options are wrong
- (a) Establish more banks
- The passage emphasizes the need for access to existing or appropriate financial institutions rather than specifically calling for the establishment of more banks.
- (b) Increase the Gross Domestic Product (GDP) growth rate
- The text focuses on household-level savings and consumption smoothing, not on macroeconomic indicators like GDP growth rate.
- (c) Increase the interest rate of bank deposits
- While reasonable financial incentives are mentioned, the primary barrier identified is the lack of access to institutions, not specifically the level of interest rates.
Asked in the CSAT Paper II of the UPSC Civil Services Preliminary Examination 2015, held on 23 August 2015. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.