Current based PRELIMS QUESTION 20 May 2020

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1. Consider the following statements regarding the Polar Satellite Launch Vehicle (PSLV).
1. It is a three-staged launch vehicle with first and third stage using solid rocket motors and second stage using liquid rocket engines.
2. The PSLV has helped take payloads into almost all the orbits in space including Geo-Stationary Transfer Orbit (GTO).
3. It has a history of successful launches of payloads that include Chandrayaan-1, Mars Orbiter Mission (MOM) and the space recovery mission, etc.
4. PSLV is designed mainly to deliver the earth-observation or remote-sensing satellites.
Which of the statement(s) given above is/are correct?
(a) 1, 2 and 3 only
(b) 2, 3 and 4 only
(c) 1, 3 and 4 only
(d) All of the above
Answer-b
Explanation-
Polar Satellite Launch Vehicle (PSLV)
It is the 3rd generation launch vehicle and first Indian launch vehicle to be equipped with liquid stages.
PSLV emerged as the reliable and versatile workhorse launch vehicle of India with consecutively successful missions.
3 variations in PSLV – PSLV-G (General), PSLV-XL variants and PSLV-CA (Core Alone).
It has 4 stages in its operation to provide thrust in launching spacecraft to different orbits.
Stage I: It uses solid rocket motor that is augmented by 6 solid strap-on boosters. Strap on boosters are used only in G and XL variation.
Stage II: It uses an Earth storable liquid rocket engine, known as the Vikas engine.
Stage III: It uses solid rocket motor that provides high thrust after the atmospheric phase of the launch.
Stage IV: It comprises two Earth storable liquid engines.
Capacity – 1,750 kg of payload to Sun-Synchronous Polar Orbits of 600 km altitude and to 1,425 kg of payload to Geosynchronous and Geostationary orbits, like satellites from the IRNSS constellation.
PSLV launches in 2018/2019–PSLV – C44/Microsat, Kalamsat; PSLV – C43/ Hysis; PSLV – C42/foreign satellites; PSLV – C41/IRNSS-1I; PSLV – C40/Cartosat-2 series.
PSLV is designed mainly to deliver the “earth-observation” or “remote-sensing” satellites with lift-off mass of up to about 1750 Kg to Sun-Synchronous circular polar orbits of 600-900 Km altitude.
It is a four-staged launch vehicle with first and third stage using solid rocket motors and second and fourth stages using liquid rocket engines.
It is the first Indian launch vehicle to be equipped with liquid stages.
Initially, PSLV had a carrying capacity of 850 kg but has been enhanced to 1.9 tonnes.
The PSLV has helped take payloads into almost all the orbits in space including Geo-Stationary Transfer Orbit (GTO), the Moon, and Mars and would soon be launching a mission to the Sun.
Between 1994 and 2019, the PSLV launched 50 Indian satellites and 222 foreign satellites for over 70 international customers from 20 countries.
It has a history of successful launches of payloads that include Chandrayaan-1, Mars Orbiter Mission (MOM) and the space recovery mission, etc.
The PSLV has failed only twice in its history — the maiden flight of the PSLV D1 in 1993 and the PSLV C-39 in 2017.
https://www.isro.gov.in/launchers/pslv

2. Consider the following statements regarding the Capital to Risky Asset Ratio (CRAR).
1. It is used to protect depositors and promote the stability and efficiency of financial systems around the world.
2. It is the ratio of a bank’s capital in relation to its risk weighted assets and current liabilities.
3. It is decided by central banks and bank regulators to prevent commercial banks from taking excess leverage and becoming insolvent in the process.
4. As per RBI norms, Indian scheduled commercial banks are required to maintain a CAR of 9% while Indian public sector banks are emphasized to maintain a CAR of 12%.
Which of the statement(s) given above is/are correct?
(a) 1, 2 and 3 only
(b) 2, 3 and 4 only
(c) 1, 3 and 4 only
(d) All of the above
Answer-d
Explanation-
Capital to Risky Asset Ratio (CRAR)
One of the leading outcomes of the financial sector crisis of 2007 is that financial regulators or central banks are coming out with strict regulation of financial institutions. They found that the best way to ensure non failure of financial institutions including commercial banks is to put more capital into these institutions.
Thus, the central banks are instructing the banks to increase capital by the share holders. More the capital put by the shareholders or owners of banks, the more will be the capability of the banks to overcome a crisis on its own. Similarly, if the share holders are injecting more money, the bank will not take any risks, as it may result in more loss of money of the shareholders; in the case of a bank failure.
This means that a situation of government or the central bank coming for the rescue of a failing bank by giving fund to it doesn’t arise. In this way, capital enhancement became the core policy of many new financial sector regulation measures including Basel III.
Now, how much capital is to be put into a bank?
Here comes the concept of capital adequacy ratio (CAR) or capital to risk weighted asset ratio (CRAR). The CRAR is the capital needed for a bank measured in terms of the assets (mostly loans) disbursed by the banks. Higher the assets, higher should be the capital by the bank.
A notable feature of CRAR is that it measures capital adequacy in terms of the riskiness of the assets or loans given. For example, if the bank has given loans to the government by investing in government securities like government bonds, it need not keep any capital. This is because, the riskiness of loans to government securities is zero and hence, the risk weight for government securities is zero.
But in the case of risky assets like loans to the real estate sector, the risk weight will be higher- for example 300 %. Here, if the CRAR is 9 % (for standard assets with a risk weight of 100%); a bank should keep Rs 27 for giving Rs 100 loans to the real estate sector.
The Basel III norms stipulated a capital to risk weighted assets of 8%. However, as per RBI norms, Indian scheduled commercial banks are required to maintain a CAR of 9% while Indian public sector banks are emphasized to maintain a CAR of 12%.
Tier I and Tier 2 capital
Capital is classified in terms of its degree of contribution from the owners (share holders). Tier 1 Capital is more equity capital or it is provided by the most responsible people of the bank – its share holders. Hence, most of the tier 1 capital will be in the form of equities. On the other hand, tier 2 capital is more in the form of reserves, debts etc.
Tier 1 Capital: is the core measure of a bank’s financial strength from a regulator’s point of view. It is composed of core capital, which consists primarily of common stock and disclosed reserves, but may also include non-redeemable non-cumulative preferred stock.
Tier 2 Capital: represents “supplementary capital” such as undisclosed reserves, revaluation reserves, general loan-loss reserves, hybrid (debt/equity) capital instruments, and subordinated debt of the financial institution.
The idea is simple, if you are managing huge money in the form of loans given, you should put more money into your bank. Such a deployment of money will make you more responsible while you give loans (because loans are financed out of deposits, if loans are not coming back, the depositors should not suffer).

3. Consider the following statements regarding the Market capitalisation (m-cap).
1. It is calculated by multiplying total number of company’s outstanding shares by the current market price of one share.
2. It helps the investors choose the stock that can meet their diversification criterion.
3. It is one of the most important characteristics that help the investor determine the returns and the risk in the share.
Which of the statements given above 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-
Market Capitalization
Market capitalization is the aggregate valuation of the company based on its current share price and the total number of outstanding stocks.
It is calculated by multiplying the current market price of the company’s share with the total outstanding shares of the company.
Market capitalization is one of the most important characteristics that help the investor determine the returns and the risk in the share.
It also helps the investors choose the stock that can meet their risk and diversification criterion.
For instance, a company has 20 million outstanding shares and the current market price of each share is Rs100. Market capitalization of this company will be 200,00,000 x 100=Rs 200 crore.
Stocks of companies are of three types. The stocks with a market cap of Rs 10,000 crore or more are large cap stocks. Company stocks with a market cap between Rs 2 crore and 10 crore are mid cap stocks and those less than Rs 2 crore market cap are small cap stocks.

4. Consider the following statements regarding the Upanishads.
1. The main motto of the Upanishads is “Knowledge Awards Salvation”.
2. The Oldest Upanishads are Brhadaranyaka and Chandogya Upanishads which date as back as the first millennium BC.
3. There are 108 Upanishad. 11 are predominant and they are called “Mukhya Upanishads”.
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-
Upanishads
The word Upanishad means to sit down near someone and denotes a student sitting near his guru to learn. Eventually the word began to be used for the secret knowledge imparted by the guru to his selected pupils. A number of treatises were prepared, first orally and then in writing, and were called by the same name of Upanishad. Today Upanishads specify philosophical knowledge and spiritual learning.
The main motto of the Upanishads is “Knowledge Awards Salvation”
Upanishads are called Vedanta (the end of the Veda) firstly, because they denote the last phase of the Vedic period and secondly, because they reveal the final aim of the Veda.
The Oldest Upanishads are Brhadaranyaka and Chandogya Upanishads which date as back as the first millennium BC.
Latest were composed in the medieval and early modern period. The latest Upnishad is Muktikā Upnishad and was recorded by Dara Shikoh. It dates to 1656. Dara Shikoh was son of Mughal emperor Shah Jahan and is known to have translated fifty Upanishads into Persian. There are 108 Upanishads and they are also called Vedanga. “Upa” means nearby and “sada” means sit. So Upanishads contain the knowledge imparted by the gurus to their disciples.
There are 108 Upanishad. 11 are predominant and they are called “Mukhya Upanishads“. They are
as follows:

Aitareya Upanishad
Aitareya Upanishad should be noted for one of the 4 Mahavakyas viz. “Prajanam Brahama” or “Consciousness is Brahman”. The Four Mahavakyas of Vedas are as follows:
Prajnanam Brahma – “Consciousness is Brahman” (Aitareya Upanishad of the Rig Veda)
Ayam Atma Brahma – “This Self (Atman) is Brahman” (Mandukya Upanishad of the Atharva
Veda) Tat Tvam Asi – “Thou art that” (Chandogya Upanishad of the Sama Veda)
Aham Brahmasmi – “I am Brahman” (Brhadaranyaka Upanishad of the Yajurveda)

Upanishads are sources of serious philosophical thought; however, this Upanishad differs from other Upanishads by explaining the same principles in a very simple, easy-going and poetic way.
Kathopnishad
It was translated by Max Müller in 1879. It was rendered in verse by Edwin Arnold as “The Secret of Death”. The central story is immortality and covers the story of encounter of Nachiketa, son of sage Vajasravasa, with Yama, God of death.
Muktika Upnishad
This Upanishad deals with the Para Vidya and Apara Vidya. The Para Vidya is knowledge that leads to Self Realization, Apara Vidya deals with everything else or the material knowledge. Mundaka Upanishad is notable as the source of the phrase Satyameva jayate (3.1.6)
Māandūkya
Mandukya is the Shortest Upnishad. It contains twelve verses expounding the mystic syllable Aum, the three psychological states of waking, dreaming and sleeping, and the transcendent fourth state of illumination.
Praśna
Six pupils interested in knowing divinity or Brahman come to sage Pippalada and requests him to clarify their spiritual doubts. Therefore, this Upnishad is in Question Answer format.

5. Consider the following statements regarding the Registrar General and Census Commissioner of India (RGCC).
1. The post of the RGCC of India is usually held by a civil servant holding the rank of Joint Secretary to Government of India.
2. He heads the Census organisation which functions under the aegis of Statistic & programme Implimentation (MHA).
3. He is responsible for conducting the decennial Census.
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-c
Explanation-
Registrar General and Census Commissioner of India (RGCC)
The post of the RGCC of India is usually held by a civil servant holding the rank of Joint Secretary to Government of India. It is responsible for conducting the decennial Census.
He heads the Census organisation (mentioned in entry 69 of seventh schedule of Constitution) which functions under the aegis of Union Ministry of Home.
RGCC founded in 1961 by Government of India Ministry of Home Affairs, for arranging, conducting and analysing the results of the demographic surveys of India including Census of India and Linguistic Survey of India.