Current based PRELIMS QUESTION 24 July 2020

1. RBI has introduced a separate channel to enable non residents to invest in specified government bonds. Consider the following statements with respect to this.
1. Non Resident investors can invest in specified government securities without being subject to any investment ceilings.
2. It would also facilitate inclusion of Indian government securities in global bond indices.
3. Fully Accessible Route (FAR) has been launched to enable NRIs to invest in specified Government of India dated securities with effect from April 1, 2020.
Which of the statement(s) given above is/are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer-d
Explanation-
NRIs can now invest in specified govt. bonds
Recently, the Reserve Bank of India (RBI) has introduced a separate channel called Fully Accessible Route (FAR) to enable non-residents to invest in specified Government of India dated securities with effect from April 1.
The move follows the Union Budget announcement that certain specified categories of government securities would be opened fully for non-resident investors without any restrictions.
‘Specified securities’ shall mean Government Securities as periodically notified by the Reserve Bank for investment under the FAR route.
The RBI has said that all new issuances of Government securities (G-secs) of 5-year, 10-year, and 30-year tenors will be eligible for investment as specified securities.
Non Resident investors can invest in specified government securities without being subject to any investment ceilings.
This scheme shall operate along with the two existing routes:
The Medium Term Framework (MTF) for Foreign Portfolio Investment (FPI) in Central Government Securities (G-secs) and State Government Securities (SDLs) was introduced in October 2015.
FPI consists of securities and other financial assets passively held by foreign investors.
The Voluntary Retention Route (VRR) encourages Foreign Portfolio Investors to undertake long-term investments in Indian debt markets.
Benefits of the Scheme
This will ease the access of non-residents to Indian government securities markets.
This would facilitate inclusion in global bond indices.
Being part of the global bond indices would help Indian G-secs attract large funds from major global investors, including pension funds.
This would also facilitate inflow of stable foreign investment in government bonds.
https://www.thehindu.com/business/nris-can-now-invest-in-specified-govt-bonds/article31211477.ece

2. Consider the following statements with respect to the Kaveri River.
1. It rises in the Brahmagiri range of the Western Ghats and falls in the Bay of Bengal.
2. It forms the sacred islands of Srirangapatna and Shivanasamudra and Shivanasamudra falls and also a wide delta.
3. Its basin drains parts of Karnataka, Kerala and Tamil Nadu.
4. Kabini and Amravati is the tributary of Kaveri River.
Which of the following statements is/are correct?
(a) 1, 2 and 3 only
(b) 2, 3 and 4 only
(c) 1 and 2 only
(d) All of the above
Answer-d
Explanation-
Kaveri River
According to the Karnataka State Pollution Control Board (KSPCB), the strict enforcement of 21-day lockdown due to the COVID-19 pandemic has reduced the pollution in Kaveri River and its tributaries. However, the Board will test the water samples at the regional laboratory in Mysore under the national programme ‘Monitoring of Indian National Aquatic Resources’ and Global Environmental Monitoring Scheme.
Kaveri River
Kaveri is a sacred river of southern India. It rises in the Brahmagiri range of the Western Ghats and falls in the Bay of Bengal south of Cuddalore, in Tamil Nadu.
It forms the sacred islands of Srirangapatna and Shivanasamudra and Shivanasamudra falls and also a wide delta.
Total Length of the river is about 760 km.
Its main tributaries are Amravati, Bhavani, Hemavati, Kabini, Shimsha, and Lakshmana Tirtha.
Its basin drains parts of Karnataka, Kerala and Tamil Nadu.
https://www.thehindu.com/news/national/karnataka/cauvery-tributaries-in-old-mysuru-region-look-cleaner-as-pandemic-keeps-pollution-away/article31210429.ece

3. Consider the following statements regarding the Liberalised Remittance Scheme (LRS).
1. The Liberalised Remittance Scheme (LRS) of the RBI allows resident individuals to remit a certain amount of money during a financial year to another country for investment and expenditure.
2. The remitted amount can also be invested in shares, debt instruments, and be used to buy immovable properties in overseas market.
3. According to the prevailing regulations, resident individuals may remit up to $500,000 per financial year.
Which of the following statements is/are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer-b
Explanation-
Liberalised Remittance Scheme
The Liberalised Remittance Scheme (LRS) of the Reserve Bank of India (RBI) allows resident individuals to remit a certain amount of money during a financial year to another country for investment and expenditure.
Further, resident individuals can avail of foreign exchange facility for the purposes mentioned in Para 1 of Schedule III of FEM (CAT) Amendment Rules.
However, LRS restricts buying and selling of foreign exchange abroad, or purchase of lottery tickets or sweep stakes, proscribed magazines and so on, or any items that are restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000.
The Scheme was introduced on February 4, 2004, with a limit of USD 25,000. The LRS limit has been revised in stages consistent with prevailing macro and micro economic conditions. Further, resident individuals can avail of foreign exchange facility for the purposes mentioned in Para 1 of Schedule III of FEM (CAT) Amendment Rules 2015, dated May 26, 2015, within the limit of USD 2, 50,000 only.
In case of remitter being a minor, the LRS declaration form must be countersigned by the minor’s natural guardian. The Scheme is not available to corporates, partnership firms, HUF, Trusts etc.
The remittance facility under the Scheme is not available for the following:
i. Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000.
ii. Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty.
iii. Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market.
iv. Remittance for trading in foreign exchange abroad.
v. Capital account remittances, directly or indirectly, to countries identified by the Financial Action Task Force (FATF) as “non- cooperative countries and territories”, from time to time.
vi. Remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks.
https://m.rbi.org.in/Scripts/FAQView.aspx?Id=115

4. Consider the following statements regarding the Demands on grants.
1. It includes provisions with respect to revenue expenditure, capital expenditure, grants to State and Union Territory governments together with loans and advances.
2. It is required to be voted upon in the Lok Sabha, are submitted in pursuance of Article 113 of the Constitution.
3. No demand for grants can be presented in the Lok Sabha without the President of India’s prior approval.
Which of the following statements is/are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer-d
Explanation-
Demands on grants
It is a well established principle among modern democracies that no money can be withdrawn from the exchequer of the country without the authority of law.
Any withdrawal or disbursement from the Consolidated Fund of India can only be done by passing a bill in the Lok Sabha, the house of people.
What are Grants in Parliament?
Article 113 of the Constitution requires that any proposal or estimate seeking withdrawal of money from the Consolidated Fund of India should be presented to the Lok Sabha in the form of a demand for grants.
Demand for Grants are proposed by Ministry
Therefore, every ministry prepares a demand for grants for the expenditure to be incurred in the next financial year. These demands are collectively presented in the Lok Sabha as part of the Union Budget.
Demand for Grants: What does it include?
The demand for grants include both charged and voted expenditure. Charged expenditures are considered liabilities of the government of India such as payment of interest and are not put to vote in the Lok Sabha.
The other category of expenditure is voted expenditure that includes revenue and capital expenditure to be incurred on a government scheme in the next financial year.
Usually, there is a demand for grant for each ministry, but large ministries like Finance and Defence have more than one demand for grants.
Demand for Grants: How it is prepared
Each demand for grant is prepared in two ways:
• First, it clearly distinguishes the charged expenditure and the voted expenditure
• It also classifies expenditure as capital expenditure and revenue expenditure
• While capital expenditure results in the creation of some kind of assets for the government, revenue expenditures are operational in nature
In addition to giving the break-up of charged and voted expenditure and revenue and capital expenditure, a demand for grants also gives a gross estimate of the total expenditure to be incurred.
A demand for grants also gives the following:
• Break-up of expenditure under different heads of account and
• Lists out the recoveries to be made from the scheme.
• The net amount of expenditure after deducting the recoveries is also shown.
Note that each demand for grants also includes:
• The total provisions required for a service or scheme, basically both revenue and capital expenditure
• Any assistance to be given to states and UTs
• Loans and advances related to that service or scheme
Demand for Grants: Powers of Lok Sabha
Under Article 113, the Lok Sabha has the power to give or refuse its assent to a demand for grants or it can reduce the amount specified in the demand.
How Demand for Grants are Presented
Article 113 (iii) prescribes that no demand for grants can be presented in the Lok Sabha without the President of India’s prior approval.
Under Articles 117 and 274 of the Indian Constitution, a Presidential recommendation is also required for tabling a Money Bill in the Lok Sabha.
The Finance Bill, accompanying the annual financial statement which is called the Union Budget, also carries a certificate issued by the President.
https://www.financialexpress.com/what-is/demand-for-grants-meaning/1762790/

5. Consider the following statements with reference to the Global Environment Monitoring System (GEMS).
1. It was introduced in 1975 at the United Nations Conference on the Human Environment.
2. It is a global operation that collects information to better understand and protect the Earth’s environment.
3. The GEMS has examined the quality of surface and ground water to find trends that will shape water quality policy.
Which of the statement(s) given above is/are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer-d
Explanation
Global Environment Monitoring System (GEMS)
The Global Environment Monitoring System (GEMS) is a collective effort of the world community to acquire, through monitoring; the data needed for rational management of the environment, and arose from recommendations of the United Nations Conference on the Human Environment which was held in Stockholm in 1972.
The GEMS Programme Activity Centre (PAC) at UNEP headquarters in Nairobi, Kenya, coordinates all that it can of the various environmental monitoring activities which are carried on throughout the world—particularly those within the United Nations System.
Great care is taken to ensure that data gathered by GEMS are of the highest attainable quality, and that data collected from different parts of a particular monitoring network are both comparable and compatible.
The GEMS Programme Activity Centre (PAC), in the manner of UNEP itself, is not operational but works mainly through the intermediary of the Specialized Agencies of the United Nations System—most notably FAO, ILO, UNESCO, WHO, and WMO—together with appropriate intergovernmental organizations such as IUCN.
The GEMS monitoring system consists of five closely interrelated programmes which have built-in provision for training and for rendering technical assistance to ensure the participation of countries that are inadequately provided with personnel and equipment. The five are:
1. Climate-related monitoring;
2. Monitoring of long-range transport of pollutants;
3. Health-related monitoring (concerned with pollution effects);
4. Ocean monitoring; and
5. Terrestrial renewable-resource monitoring.
Each of these broad areas contains at least five distinct world-wide monitoring networks. Examples of these latter are the World Glacier Inventory, Background Air Pollution Monitoring Network, Urban Air Pollution Monitoring Network, Global Water Quality Monitoring Network, Tropical Forest Monitoring Network, Species Conservation Monitoring Network, etc.
Monitored data are gathered at suitable coordinating centres for each network at which appropriate data-bases have been, or are being, established. Data are analyzed to produce periodic regional and global assessments which are reported at intervals that are appropriate to the variable which is being considered.
https://www.cambridge.org/core/journals/environmental-conservation/article/global-environment-monitoring-system-gems-of-unep/A96C405DDA0EB79A6584A2EEE9C1630F