Current based PRELIMS QUESTION 22 August 2020

  1. Which of the following conservation site in news and state of location are correctly matched?
    Conservation site State
    1. Nagarahole Tiger Reserve Karnataka
    2. Cauvery Wildlife Sanctuaries Tamil Nadu
    3. Agasthyavanam Biological Park Kerala
    4. Peppara Wildlife Sanctuary Orissa
    Choose the correct option.
    (a) 1, 2 and 4 only
    (b) 1 and 3 only
    (c) 2 and 3 only
    (d) 1, 3 and 4 only
    Answer-b
    Explanation-
    Conservation site State
    Nagarahole Tiger Reserve Karnataka
    Cauvery Wildlife Sanctuaries Karnataka
    Agasthyavanam Biological Park Kerala
    Peppara Wildlife Sanctuary Kerala

    2. Consider the following statements regarding the Hydroelectricity Generation in India.
    1. The hydropower generation is highly capital-intensive mode of electricity generation but being renewable source of energy with no consumables involved.
    2. The oldest Hydropower power plant is in Darjeeling District in West Bengal.
    3. The hydropower potential of India is around 1, 45,000 MW and at 60% load factor, it can meet the demand of around 85, 000 MW.
    4. Large Hydropower Projects are also categorised as renewable energy under New Hydroelectricity Policy.
    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-
    Hydroelectricity Generation in India
    https://powermin.nic.in/en/content/faqs-hydropower

3. Consider the following statements regarding the GDP-linked bonds (GLBs).
1. GLBs could potentially be a useful instrument for debt management and a sovereign risk-reduction tool.
2. A GLB is a debt security with repayments that are linked to the issuing country’s GDP.
3. The primary benefit to a government of issuing
GDP-linked bonds are its effect on debt sustainability.
4. Adverse selection, moral hazard and developing a market for a new product are the several factors that may discourage governments from issuing these bonds.
Which of the statements given above 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-
GDP-linked bonds (GLBs)
A GDP-linked bond is a debt security with repayments that are linked to the issuing country’s GDP. GDP-linked instruments have only been issued by governments as part of debt restructuring processes.
GDP-linked bonds, for which repayments are linked mechanically to the issuing country’s GDP, are a commonly cited example of such an instrument.
In principle, this type of debt is attractive because the issuing government’s repayments would move with the country’s economic growth, thereby improving its ability to service its debt during periods of weak economic activity and resulting in the ratio of debt to GDP being more stable than if the government borrowed using traditional fixed coupon debt.
The Benefits of GDP-linked Bonds
GDP-linked bonds have appealing attributes for both issuing governments and for investors. Their wider use could potentially enhance the resilience of the broader international financial system.
The primary benefit to a government of issuing GDP-linked bonds is its effect on debt sustainability. In particular, the government’s burden of servicing its debt would be lessened during an economic downturn.
This is because the interest burden on GDP-linked debt would be positively related to economic growth, so any additional borrowing to cover debt-servicing costs would be lower during downturns and higher during upturns.
In addition to making a given level of debt more sustainable, GDP-linked bonds could also allow governments to increase their debt without putting at risk their ability to pay during periods of economic weakness.
Moreover, the use of GDP-linked bonds could also increase the scope for stimulatory fiscal policy during downturns, as the interest burden would decline as GDP growth eases.
This option may be particularly attractive for governments of emerging market economies, which may otherwise face pressure to reduce their debt during a recession in order to restore market confidence.
Alternatively, governments could choose to reduce their level of debt by keeping their debt repayments constant and allowing their repayments of principal to increase as their interest costs decline.
For investors, GDP-linked bonds would provide an opportunity to gain direct exposure to economic growth.
It has been claimed that the issuance of GDP-linked bonds could generate positive spill overs. GDP-linked bonds could benefit holders of the issuing government’s conventional bonds, as GDP-linked bonds might reduce a government’s default risk.
The improvement in debt sustainability could also benefit other nations, since sovereign defaults often lead to contagion and turbulence in foreign financial markets more generally.
Challenges Associated with GDP-linked Bonds
In practice, however, there are several factors that may discourage governments from issuing GDP-linked bonds or dissuade investors from purchasing them. These can broadly be grouped into problems associated with adverse selection, moral hazard and developing a market for a new product.
An adverse selection problem may arise if governments are more likely to issue GDP-linked bonds when they expect growth to be weak and therefore expect repayments to be low in the near term. If investors consider this adverse selection problem to be material, the issuance of GDP-linked bonds could cause them to revise down their expectations of growth for the issuing country. This could lead to higher premiums on both GDP-linked and conventional bonds for the issuer and could, in turn, create debt-servicing challenges for the government.
GDP-linked bonds could introduce moral hazard, because governments may have some incentive to stymie growth in an effort to reduce their borrowing costs.
As with any new financial instrument, the development of a market for GDP-linked bonds could also face some initial challenges as issuers and investors gain familiarity with the product.

4. Consider the following statements.
1. Prevention of infectious diseases moving from one State to another is under the State List.
2. Inter-State migration and quarantine are under the Union List.
Which of the statement(s) given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer-b
Explanation-
Inter-State migration and quarantine are under the Union List, while the prevention of infectious diseases moving from one State to another is under the Concurrent List.
This can only mean that while States have the power to impose border restrictions, the responsibility to prevent a breakdown of inter-State relations over such disputes is on the Centre.
https://www.thehindu.com/opinion/editorial/enemy-at-the-gates-the-hindu-editorial-on-kerala-karnataka-border-issue/article31264459.ece

5. Consider the following statements with reference to the United Nations (UN)-Women.
1. It is the United Nations entity dedicated to gender equality and the empowerment of women.
2. In 2015, the United Nations General Assembly created UN Women to works globally to make the vision of the Sustainable Development Goals a reality for women and girls and stands behind women’s equal participation in all aspects of life.
3. It merges and builds on the important work of four previously distinct parts of the UN system, which focused exclusively on gender equality and women’s empowerment.
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-
In July 2010, the United Nations General Assembly created UN Women, the United Nations Entity for Gender Equality and the Empowerment of Women, to address such challenges. In doing so, UN Member States took an historic step in accelerating the Organization’s goals on gender equality and the empowerment of women.
It merges and builds on the important work of four previously distinct parts of the UN system, which focused exclusively on gender equality and women’s empowerment:
• Division for the Advancement of Women (DAW)
• International Research and Training Institute for the Advancement of Women (INSTRAW)
• Office of the Special Adviser on Gender Issues and Advancement of Women (OSAGI)
• United Nations Development Fund for Women (UNIFEM)
UN Women is the United Nations entity dedicated to gender equality and the empowerment of women. A global champion for women and girls, UN Women was established to accelerate progress on meeting their needs worldwide.
UN Women supports UN Member States as they set global standards for achieving gender equality, and works with governments and civil society to design laws, policies, programmes and services needed to ensure that the standards are effectively implemented and truly benefit women and girls worldwide.
It works globally to make the vision of the Sustainable Development Goals a reality for women and girls and stands behind women’s equal participation in all aspects of life, focusing on four strategic priorities:
• Women lead, participate in and benefit equally from governance systems
• Women have income security, decent work and economic autonomy
• All women and girls live a life free from all forms of violence
• Women and girls contribute to and have greater influence in building sustainable peace and resilience, and benefit equally from the prevention of natural disasters and conflicts and humanitarian action
UN Women also coordinates and promotes the UN system’s work in advancing gender equality, and in all deliberations and agreements linked to the 2030 Agenda.
The entity works to position gender equality as fundamental to the Sustainable Development Goals, and a more inclusive world.
Over many decades, the United Nations has made significant progress in advancing gender equality, including through landmark agreements such as the Beijing Declaration and Platform for Action and the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW).
Working for the empowerment and rights of women and girls globally, UN Women’s main roles are:
• To support inter-governmental bodies, such as the Commission on the Status of Women, in their formulation of policies, global standards and norms.
• To help Member States implement these standards, standing ready to provide suitable technical and financial support to those countries that request it, and to forge effective partnerships with civil society.
• To lead and coordinate the UN system’s work on gender equality, as well as promote accountability, including through regular monitoring of system-wide progress.
https://www.unwomen.org/en/about-us/about-un-women