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UPSC Prelims 2026 GS Paper 1, question 97

Topic: Economy

Q97

Which of the following statements about Crowdfunding is/are correct ?

  1. Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project.

  2. Small and Medium Enterprises (SMEs) are able to raise funds at lower cost of capital without undergoing rigorous procedures.

Select the answer using the code given below :

  1. (a) 1 only
  2. (b) 2 only
  3. (c) Both 1 and 2Correct answer
  4. (d) Neither 1 nor 2

Solution.

Answer: (c) Both 1 and 2

  1. Statement 1 is correct: as defined in SEBI's Consultation Paper on Crowdfunding in India, crowdfunding is the solicitation of small amounts of funds from multiple investors through a web-based platform or social networking site for a specific project or business venture.
  2. Statement 2 is correct: crowdfunding enables startups and SMEs to raise early-stage capital at a relatively lower cost of capital without the rigorous compliance procedures of a public issue or collateralized bank loan.