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Daily Prelims Test – 04 January 2022

1. Which of the following articles are related to provisions for the formation of new states in India?

a)    Article 2

b)    Article 3

c)    Article 4

d)    All of the above

Answer: (d) All of the above

Explanation:

In NEWS: Centre will grant Statehood for the Union Territory of Puducherry, says CM

●      The Chief Minister expressed confidence that the Centre would grant Statehood for the Union Territory of Puducherry.

●      In India, new states are created following the provisions as prescribed under Articles 2, 3 and 4 of the Constitution of IndiaHence option (d) is correct.

●      Article 2 is titled as: Admission and establishment of new states.

●      Article 3 of Indian Constitution addresses the topic of ‘Formation of new States and alteration of areas, boundaries or names of existing States’.

It says; Parliament may by law

●      form a new State by separation of territory from any State or by uniting two or more States or parts of States or by uniting any territory to a part of any State;

●      increase the area of any State;

●      diminish the area of any State;

●      alter the boundaries of any State;

●      alter the name of any State; Provided that no Bill for the purpose shall be introduced in either House of Parliament except on the recommendation of the Presiden

Steps Taken for Creation of New State

●      Article 4 of the Indian Constitution reflects a mandatory direction to the Parliament while framing a legislation under Article 2 and 3.

●      The steps for creating a new state are as follows:

●      A bill on a new state has to be recommended by the President. In India it is usually the Cabinet which requests the President to do that.

●      Article 3 makes it clear that the Parliament is the sole authority on making a decision on a new state.

●      The President refers the bill to the State Assembly for its views giving it a certain period of time. Parliament is not obligated to follow the views of the State Assembly.

●      If the State Assembly does not express its opinion within the specified period of time, the bill could be introduced in the Parliament after the expiry of the specified period.

Source: https://www.thehindu.com/news/cities/puducherry/centre-will-grant-statehood-for-the-union-territory-of-puducherry-says-cm/article38044175.ece

2. With respect to Lignite, consider the following statements:

1)    It is an intermediate between peat and subbituminous coal.

2)    It occurs in the tertiary sediments in the southern and western parts of the peninsular shield.

3)    It is the lowest grade coal with the least concentration of carbon.

Which of the statements given above is/are correct?

a)    1 only

b)    2 and 3 only

c)    1 and 2 only

d)    1, 2 and 3

Answer: (d) 1, 2 and 3

Explanation:

In NEWS: Rajasthan to mine lignite for enhanced power generation

●      The Congress government in Rajasthan is preparing an ambitious road map in the New Year for mining of lignite in Bikaner district’s Gudha West and the installation of a new lignite-based thermal power plant in its vicinity.

●      The joint action plan is expected to significantly enhance the State’s power generation capacity.

Lignite:

●      Lignite is a dark brown to black combustible mineral formed over millions of years by the partial decomposition of plant material subject to increased pressure and temperature in an airless atmosphere

●      Lignite is the first product of transformation during initial coalification from peat, and subbituminous coal is the subsequent productHence, statement (1) is correct.

●      Indian lignite deposits occur in the tertiary sediments in the southern and western parts of peninsular shield. Hence, statement (2) is correct.

●      It includes states like Tamil Nadu, Puducherry, Kerala, Gujarat, Rajasthan and Jammu & Kashmir.

●      Lignite is abundant and accessible.

●      Lignite-generated electricity is reliable.

●      Lignite-generated electricity is environmentally compatible.

●      Lignite-generated electricity is low-cost. Hence, statement (3) is correct.

●      Lignite is used in an environmentally-responsible manner by power plants. Hence, statement (3) is correct.

Source: https://www.thehindu.com/news/national/other-states/rajasthan-to-mine-lignite-for-enhanced-power-generation/article38095525.ece

3. Consider the following statements with reference to Anchor investors:

1)    They are institutional investors who are offered shares in an IPO a day before the offer opens.

2)    They will not be able to sell more than half their shares before 30 days from the date of the IPO.

Which of the statements given above is/are correct?

a)    1 only

b)    2 only

c)    Both 1 and 2

d)    Neither 1 nor 2

Answer: (a) 1 only

Explanation:

In NEWS: Explained | How will revised IPO rules affect the market?

●      The Securities and Exchange Board of India (SEBI) on Tuesday came out with some fresh rules for initial public offerings (IPOs).

●      The new rules will oversee how companies price their shares, how they use the money that they receive from investors, how much of their stake promoters of a company can sell during an IPO, and how soon anchor investors can sell the stakes they picked up before the IPO.

●      Inventory markets the world over have witnessed a growth in IPO choices with a reported quantity of capital being raised by firms.

●      In India alone, capital price over ₹1 trillion has been mopped up by means of IPOs this 12 months. It’s pure for each quantity and the scale of IPOs to rise throughout a bull market.

●      Firms see bull markets, through which normally lots of investor cash is chasing shares and inflicting them to be overvalued, as a possibility to gather the required funds for his or her progress.

●      The homeowners of many firms can also see the IPO growth as a possibility to promote their stake within the enterprise at a horny worth.

New Rules:

●      The price band of an IPO should be set in such a way that the ceiling price is at least 105% of the floor price.

●      Companies will not be allowed to use more than 35% of the money that they collect through IPOs to fund the purchase of other businesses, unless they offer sufficient details.

●      Promoters with a stake of over 20% in a company cannot sell more than half of their stake in an IPO.

●      Anchor investors will not be able to sell more than half their shares before 90 days from the date of the IPO, against the current time stipulation of 30 daysHence, statement (2) is incorrect.

Anchor investors:

●      Anchor investors are institutional investors who are offered shares in an IPO a day before the offer opensHence, statement (1) is correct.

●      As the name suggests, they are supposed to ‘anchor’ the issue by agreeing to subscribe to shares at a fixed price so that other investors may know that there is demand for the shares offered.

●      SEBI introduced the concept of anchor investors in IPOs in 2009.

●      Anchor investors can bid for shares at anywhere within the price band declared by the company. 

●      No merchant banker, promoter or their relatives can apply for shares under the anchor investor category. 

Source: https://www.thehindu.com/business/markets/explained-how-will-revised-ipo-rules-affect-the-market/article38089896.ece

4. Consider the following statements regarding Initial Public Offer:

1)    It is issued only by the unlisted company.

2)    It forms the primary market for shares.

Which of the statements given above is/are correct?

a)    1 only

b)    2 only

c)    Both 1 and 2

d)    Neither 1 nor 2

Answer: (c) Both 1 and 2

Explanation:

In NEWS: IPO party set to continue into the new year: mop-up may hit $26 billion

●      After a record breaking 2021, the initial public offering (IPO) market is expected to witness further action in 2022 with more companies lining up to raise funds. Issuers are planning to mop up $26 billion (around Rs 1,95,000 crore) through IPOs in the new year

●      The IPO market momentum is set to accelerate further when Life Insurance Corporation (LIC) files a prospectus for its mega IPO in 2022. The new issue market will be dominated by resilient sectors such as new age tech, financial institutions, healthcare, consumer, real estate and specialty chemicals.

Initial public offering (IPO):

●      It is the sale of securities (held by promoters) by a private limited company for the first time to the public to raise funds for capital expenditure. Hence, statement (1) is correct.

●      It forms the primary market for shares. Hence, statement (2) is correct.

●      It is different from the secondary market where existing securities are bought and sold. It is also known as the stock market or stock exchange.

●      It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public.

●      Unlisted companies are companies that are not listed on the stock exchange.

Source: https://indianexpress.com/article/business/market/ipo-party-continues-2022-7702778/

5. Padhe Bharat is launched by which of the following ministries of India?

a)    Ministry of Education

b)    Ministry of Health and Family Welfare

c)    Ministry of Home Affairs

d)    Ministry of petroleum and natural gas

Answer: (a) Ministry of Education

Explanation:

In NEWS: Dharmendra Pradhan launches 100-day reading campaign ‘Padhe Bharat’

●      Padhe Bharat campaign will focus on children studying in Balvatika to Grade 8. The reading campaign will be organized for 100 days (14 weeks) starting from January 1, 2022, to April 10, 2022.

●      The reading campaign aims to have the participation of all stakeholders at the national and state level including children, teachers, parents, community, educational administrators etc. 

●      The launch of the 100 Days Reading Campaign is in alignment with the National Education Policy (NEP) 2020 which lays emphasis on the promotion of joyful reading culture for children by ensuring the availability of age-appropriate reading books for children in local/mother tongue/regional/tribal language. Hence option (a) is correct.

●      The Minister while launching the campaign has underlined the importance of reading that children need to develop to ensure continuous and lifelong learning.

●      He also reinforced that the habit of reading, if inculcated at an early age, helps in brain development and enhances imagination and provides a conducive learning environment for children.

●      Pradhan emphasized that reading is the foundation of learning, which motivates students to read books independently, develops creativity, critical thinking, vocabulary and the ability to express both verbally and in writing.

●      One activity per week per group has been designed with the focus on making reading enjoyable and building a lifelong association with the joy of reading.

●      This campaign has also been aligned with the vision and goals of the foundational Literacy and Numeracy mission.

Source: https://www.hindustantimes.com/education/news/dharmendra-pradhan-launches-100-day-reading-campaign-padhe-bharat-101641098813770.html

6. Consider the following statements:

1)    Balance of Payment is a statement which records all the monetary transactions made between residents of a country and the rest of the world during any given period.

2)    Balance of Payment includes exports and imports of goods, services and financial assets along with transfer payments.

Which of the statements given above is/are correct?

a)    1 only

b)    2 only

c)    Both 1 and 2

d)    Neither 1 nor 2

Answer: (c) Both 1 and 2

Explanation:

In NEWS: Foreign-owned assets in India rose by $37 bn in Q2: RBI data

●      Foreign-owned assets in India increased by $37.3 billion during the July-September quarter (Q2), according to RBI data.

●      Indian residents’ overseas financial assets rose $31.9 billion, almost three-fourths of which came from build-up in reserve assets. This partly reflects the allocation of special drawing rights (SDRs) by the International Monetary Fund (IMF) in August 2021, the Reserve Bank of India (RBI) said.

●      The regulator on Friday released data relating to India’s International Investment Position (IIP) at end-September 2021.

●      The International Monetary Fund describes a nation’s IIP as showing the value of financial assets of residents of an economy that are claims on non-residents, or are gold bullion held as reserve assets; and of the liabilities of residents to non-residents.

●      India’s Balance of Payments (Bop) was in surplus of $15.3 billion in Q2FY21. But the BoP position moved to a deficit of $9.6 billion in the quarter ended September (Q2).

Balance of Payments (BOP):

●      Balance Of Payment (BOP) is a statement which records all the monetary transactions made between residents of a country and the rest of the world during any given period. Hence, statement (1) is correct.

●      These transactions include exports and imports of goods, services and financial assets, along with transfer paymentsHence, statement (2) is correct.

●      The balance of payments is put together according to international standards set out by the International Monetary Fund (IMF) and the United Nation.

●      A BOP statement of a country indicates whether the country has a surplus or a deficit of funds:

●      When a country’s export is more than its import, its BOP is said to be in surplus.

●      The sum of all transactions recorded in the balance of payments must be zero.

●      The reason is that every credit appearing in the current account has a corresponding debit in the capital account.

●      A BOP statement can be used as an indicator to determine whether the country’s currency value is appreciating or depreciating.

●      The BOP statement helps the Government to decide on fiscal and trade policies.

Source: https://www.thehindu.com/business/foreign-owned-assets-in-india-rose-by-37-bn-in-q2-rbi-data/article38083010.ece

7. Consider the following statements regarding Savitribai Phule:

1)    She was an Indian social reformer, educationalist and poet from Maharashtra.

2)    She is regarded as the first female teacher of India.

3)    She published Kavya Phule which is a collection of poems in Marathi.

Which of the statements given above is/are correct?

a)    1 only

b)    2 and 3 only

c)    1 and 2 only

d)    1, 2 and 3

Answer: (d) 1, 2 and 3

Explanation:

In NEWS: Savitribai Phule’s birth anniversary: All about India’s first female teacher & feminist icon

Savitribai, together with her husband Jyotirao Phule, founded one of India’s first girls’ schools in Pune, at Bhide Wada, in 1848.

Savitribai

●      She was an Indian social reformer, educationalist, and poet from Maharashtra. Hence, statement (1) is correct.

●      She is regarded as the first female teacher of IndiaHence, statement (2) is correct.

●      Along with her husband, Jyotirao Phule, she played an important and vital role in improving women’s rights in India.

●      She is regarded as the mother of Indian feminism.

●      Savitribai and her husband founded one of the first Indian girls’ schools in Pune, at Bhide wada in 1848.

●      She worked to abolish the discrimination and unfair treatment of people based on caste and gender.

●      She was against the child marriage and strongly opposed the Sati tradition.

●      She Opened a women’s shelter called the Home for the Prevention of Infanticide where widows could deliver their children

●      She also used her voice to raise awareness regarding widow remarriage.

●      She established the Mahila Seva Mandal to raise awareness for issues concerning women’s rights.

●      She published Kavya Phule in 1854 and Bavan Kashi Subodh Ratnakar in 1892. Hence, statement (3) is correct.

Source: https://www.hindustantimes.com/india-news/savitribai-phule-s-birth-anniversary-all-about-india-s-first-female-teacher-feminist-icon-101641181222954.html

8. With respect to Financial Stability Report, consider the following statements:

1)    It is published by RBI bi-annually on behalf of the Financial Stability and Development Council.

2)    It helps in assessing the health of the financial systems of the economy.

3)    It helps as an Early Warning System in case of any financial issues.

Which of the statements given above is/are correct?

a)    1 only

b)    2 and 3 only

c)    1 and 2 only

d)    1, 2 and 3

Answer: (d) 1, 2 and 3

Explanation:

In NEWS: Banks’ NPAs may rise to 9.5% by Sept 2022 in worst-case scenario: RBI

●      The RBI today released the 24th Financial Stability Report (FSR), which reflects the collective assessment of the sub-committee of the financial stability and development council (FSDC) on risks to financial stability and the resilience of the financial system.

●      The gross non performing assets (NPAs) of banks may increase from 6.9% in September 2021 to 8.1% by September 2022 under the baseline scenario and to 9.5% under a severe stress scenario, a Reserve Bank of India (RBI) report

Financial Stability Report (FSR):

●      It is published by RBI bi-annually on behalf of the Financial Stability and Development Council, an umbrella group of regulators which gives an overview of the health of India’s financial system. Hence, statement (1) is correct.

●      It reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability and the resilience of the financial system in the context of contemporaneous issues relating to development and regulation of the financial sector.

●      The RBI looks at the state of both the global as well as domestic economy.

●      The report helps in assessing the health of the financial systems of the economy. Hence, statement (2) is correct.

●      It helps as an Early Warning System in case of any financial issues.  Hence, statement (3) is correct.

●      The report called for close monitoring of stress in stress in micro, small and medium enterprises (MSME) as also in the microfinance segment going forward.

●      PSBs have to partake in certain mandated lending programmes — for example, self-help groups (SHG), Kisan credit card (KCC) — as also education loans (domestic).

Source: https://www.livemint.com/industry/banking/npas-of-banks-may-rise-to-9-5-by-september-2022-in-worst-case-scenario-rbi-11640783062629.html

9. Consider the following statements regarding an offline digital payment:

1)    It means a transaction that does not require internet or telecom connectivity.

2)    It can be carried out face-to-face using any channel or instrument like cards, wallets and mobile devices.

Which of the statements given above is/are correct?

a)    1 only

b)    2 only

c)    Both 1 and 2

d)    Neither 1 nor 2

Answer: (c) Both 1 and 2

Explanation:

In NEWS: RBI approves small, offline e-payments

●      The Reserve Bank of India (RBI) has come out with the framework for facilitating small-value digital payments in offline mode, a move that would promote digital payments in semi-urban and rural areas.

●      The framework incorporates feedback received from the pilot experiments on offline transactions conducted in different parts of the country between September 2020 and June 2021.

●      An offline digital payment does not require Internet or telecom connectivity. Hence, statement (1) is correct.

●      Under this new framework, such payments can be carried out face-to-face (proximity mode) using any channel or instrument like cards, wallets and mobile devices. Hence, statement (2) is correct.

●      There is a limit of ₹200 per transaction and an overall limit of ₹2,000 for all transactions until the balance in the account is replenished. Balance replenishment can only occur in an online mode.

Source: https://www.thehindu.com/business/rbi-approves-small-offline-e-payments/article38102764.ece

10. 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

Answer: (c) 1 and 3 only

Explanation:

●      Water.org is a global nonprofit organization working to bring water and sanitation to the world. It started the initiative of the WaterCredit loan program to address the barrier of affordable financing for safe water and sanitation. Hence, statement (2) is incorrect.

●      WaterCredit is a powerful solution and the first to put microfinance tools to work in the water and sanitation sector.

●      WaterCredit helps bring small loans to those who need access to affordable financing and expert resources to make household water and toilet solutions a reality. Hence, statement (1) is correct.

●      It identifies a region where people need access to water and sanitation and that is ready for a microfinance solution.

●      It partners with carefully selected institutions to provide affordable financing for water and sanitation to families in need.

●      People in need use these small, affordable loans to put a tap or toilet in their homes and access local resources to do the work. It enables poor households to meet their water and sanitation needs without depending on subsidies. Hence, statement (3) is correct.