Prelims 2021

Q. With reference to ‘Water Credit’, consider the following statements:

1.It puts microfinance tools to work in the water and sanitation sector.
2.It is a global initiative launched under the aegis of the World Health Organization and the World Bank.
3.It aims to enable the poor people to meet their water needs without depending on subsidies.

Which of the statements given above are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
Correct Answer: c) 1 and 3 only

Question from UPSC Prelims 2021 GS Paper

Explanation : 

Water Credit

Water Credit is an innovative financial approach that applies the principles of microfinance to the water and sanitation sector. Developed by, an NGO co-founded by Gary White and actor Matt Damon, this concept provides small loans to individuals and communities in developing countries to enable them to access clean water and improved sanitation facilities. The idea is to empower people by giving them the financial means to invest in water and sanitation solutions that are sustainable and tailored to their needs.

Key Aspects of Water Credit

1. Microfinance Tools in Water and Sanitation
This statement is correct. Water Credit uses microfinance tools to provide loans to individuals and communities so they can afford to construct their own water supply and sanitation facilities, like wells, toilets, and water filters.

2. Global Initiative and Founding Organizations
This statement is incorrect. Water Credit was not launched under the aegis of the World Health Organization (WHO) or the World Bank. It is an initiative of, which is an independent non-governmental organization.

3. Empowering the Poor to Meet Water Needs
This statement is correct. The goal of Water Credit is to provide a sustainable financial solution to water and sanitation problems by enabling poor populations to access credit and thereby reduce their dependence on subsidies. By repaying the loans, borrowers help to replenish the fund, making it possible to extend credit to more individuals.

Therefore, the correct answer is “1 and 3 only,” which means that statements 1 and 3 are correct, while statement 2 is incorrect.

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