Daily Prelims Notes 11 July 2022

July 11, 2022
Posted by: OptimizeIAS Team
Category: DPN

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Daily Prelims Notes

11 July 2022

Table Of Contents

1. Alternative Investment Funds (AIFs)

Subject: Economy

Section: Money Market

Context:

As many as 15 alternative investment funds (AIFs) are being probed by market regulator SEBI for various malpractices and the creation of hybrid structures.

Details:

SEBI has recently tightened norms on IPO investments, which is creating difficulties for High Net Worth Investors to invest on the primary market issuances as they are placed at par with retail investors.
HNI thus uses the AFI route to invest in IPOs as AIFs are allowed even pre-IPO placements and can even corner large a stake during the IPO in any company.
Further, AIFs are being used as a substitute for Participatory Notes.
Violation of the rule which states -AIFs cannot invest more than 10 per cent of their investible funds in any of their investee companies.

Alternate Investment Fund

It is a vehicle which invests in non traditional assets- like real estate, infrastructure, venture capital etc..
An alternative investment is a financial asset that does not fall into one of the conventional equity/income/cash categories.
Private equity or venture capital, hedge funds, real property, commodities, and tangible assets are all examples of alternative investments.
It is regulated by the SEBI.
It is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors.
It is defined in Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.
AIF as a fund established or incorporated in India in the form of a Limited Liability Partnership (LLP) or Company or Trust or Body Corporate which-
- is a privately pooled investment vehicle that gathers funds from investors, including Indian investors and foreign investors, to invest it as per a defined investment policy to benefit its investors.
- does not include funds covered under the SEBI (Collective Investment Schemes) Regulations, 1999, SEBI (Mutual Funds) Regulations, 1996 or any other regulations of SEBI regulating fund management activities. Hence, in India, AIFs are private funds which are otherwise not coming under the jurisdiction of any regulatory agency in India.

Categories:

As per SEBI (AIF) Regulations, 2012, AIFs shall seek registration in one of the three categories:

Category I: invests in start-up or early stage ventures or social ventures or SMEs or infrastructure or other sectors or areas which the government or regulators consider as socially or economically desirable.
- Example– Venture capitals funds, Social Venture Funds, angel funds, Infrastructure funds
Category II: It does not fall in Category I and III and does not undertake leverage or borrowing other than to meet day-to-today operational requirements.
- Example– private equity funds, real estate funds, Funds of funds or debt funds for which no specific incentives or concessions are given by the government or any other Regulator.
Category III: AIFs which employ diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives.
- Example- Alternative Investment Funds such as hedge funds, private investment in Public Equity Funds or funds which trade with a view to make short term returns or such other funds which are open ended and for which no specific incentives or concessions are given by the government or any other Regulator.

Following are not considered a AIFs:
- Mutual funds
- Collective investment schemes
- Employee Stock Options Trusts
- Employee welfare trusts or gratuity trusts
- Family benefit trust
- Holding companies

2. FSIB composition and funding

Subject : Economy

Section: Regulation

About the Financial Services Institutions Bureau (FSIB)

The Cabinet Appointments Committee (ACC) has passed a government resolution to establish the Financial Services Institutions Bureau (FSIB) in place of the Banks Board Bureau (BBB).
All assets, interests and liabilities of the BBB now stand transferred to the FSIB
The new framework was proposed by the Department of Financial Service, the Ministry of Finance.
Mandates:
- FSIB will be the single entity for making recommendations for appointments of whole time directors (WTDs) and nonexecutive chairpersons (NEC) at public sector banks (PSBs), public sector insurers (PSI) and financial institutions (FIs).
- It will also advise the government on extension of terms and even termination of services of WTDs and NECs at the financial services institutions.
- The FSIB will also recommend a performance appraisal system for WTDs and NECs at PSBs, FIs and PSIs
- FSIB will also advise the government on formulation and enforcement of a code of conduct and ethics for WTDs and NECs.
- It will build a database on the performance of PSBs, FIs and PSIs.
- The FSIB will help PSBs, FIs and PSIs develop business strategies and capital raising plans.
- The FSIB will advise the government on the desired management structure at PSBs, FIs and PSIs.
- It will also advise the government on evolving training and development programmes for management personnel in PSBs, FIs and PSIs.
Composition:
- 11 members including chairperson –nominated by the Centre
- First chairperson– Bhanu Pratap Sharma, a former Secretary to the Department of Personnel & Training (DoPT) for 2 years.
- Ex officio members-
  - Secretaries to the Department Financial Services (DFS) and the Department of Public Enterprises
  - IRDAI chairperson.
  - A Deputy Governor of RBI
- Part time members
  - three persons with subject matter knowledge relating to PSBs and FIs will be nominated as part time members,
  - three persons with subject matter knowledge relating to PSIs are to be nominated as part time members on the insurance front.
The Department of Financial Services shall first carry out necessary modifications in the Nationalised Banks (Management and Miscellaneous Provisions) Scheme of 1970/1980 (as amended).
Expenditure-For each financial year, the funds will be contributed by each of the three categories of financial service institutions (PSBs, FIs and PSIs) in proportion to the total number of respective vacancies of WTDs and NECs at the beginning of the financial year.

Background

BBB was April 2016 to select members for PSB boards and later the Department of Financial Services (DFS) had extended the scope of the BBB to cover public sector insurers.
However, no legal mandate was given to the BBB over public sector insurance related appointments.
To this end, the Centre overhauled the framework and introduced a single entity FSIB to cover public sector banks, insurers and financial institutions.

3. Revealed: How Uber took systems for a ride, used its tech to drive past law

Subject: Governance

Section: Reports and Indices

Context:

In its eighth collaboration with the International Consortium of Investigative Journalists (ICIJ), The Indian Express spent four months investigating The Uber Files, a cache of 124,000 internal emails, text messages and documents from inside Uber.

The International Consortium of Investigative Journalists (ICIJ), legally International Consortium of Investigative Journalists, Inc.

It is an independent global network of 280 investigative journalists and over 100 media organizations spanning more than 100 countries. It is based in Washington, D.C.

Notable reports published by ICIJ

Panama Papers
Paradise Papers
Pandora Papers
China Cables
FinCEN Files

4. Can green technology hurt marine biodiversity?

Subject: Environment

Section: Biodiversity

Context: The study, published in the journal Nature Ecology and Evolution speaks about the negative impacts of green technology adoption that must not be ignored

Impact of Green Technology on Environment:

There has been an attempt to replace fossil fuel-based plastic with biodegradable polymers, such the ‘biodegradable plastic bags’ made of plant starches
However, these materials do not biodegrade under natural conditions in the ocean and their widespread adoption can cause marine litter as well
The growing demand for renewable energy technology, such as lithium batteries for electric cars, also poses a potential threat to marine ecology.
Deep sea ‘brine pools’ of more saline water, contain higher concentrations of lithium and could become future sites for extraction. A rising demand for lithium-powered electric vehicles could put these environments at risk.
There are around 10 billion tonnes of small lanternfishes in the mesopelagic zone (a depth of 200m – 1,000m), which are not fit for human consumption but can be sold as food to fish farms, or be used as fertiliser.
However, the large-scale harvesting of mesopelagic fish would cause immense environmental damage, because these species act as an ocean pump and remove carbon from the atmosphere

Concept:

Horizon scanning

It is a technique which seeks to identify novel but poorly known issues that are likely to become important consequences over the next decade
This methodology is meant to “primarily act as signposts, putting focus on particular issues and providing support for researchers and practitioners to seek investment in these areas
It is also an effective way of assembling experts from diverse subject areas to examine common issues and formulate more comprehensive solutions.
The horizon scan method has been previously used to identify issues that are now known to have universal environmental impact.
A scan from 2009 gave an early warning about the danger that microplastics (tiny plastic debris smaller than 5 mm) pose to marine environments

5. Aryan and Dravidian are geographical terms: TN Guv

Subject: History

Section: Art and Culture

The geographic regions, north and south of the Vindhya range known as ‘PanchAryas’ and ‘PanchDravidas’ respectively were mischievously distorted to create racial divide among people to weaken the country’s unity, the Governor said.
The term Dravidar or Dravidian represented regions including those in present-day Maharashtra, Andhra Pradesh, Telangana, Karnataka and Kerala.
Guv, laid a wreath at the ‘Vellore Sepoy Mutiny Memorial Pillar’ and paid tribute to the brave soldiers commemorating the ‘Day of Vellore Sepoy Uprising against the British’ here

What is Vellore Mutiny,1806

The Vellore Mutiny predated the Indian Revolt of 1857 by about 50 years. It erupted on 10^th July 1806 in Vellore, present-day Tamil Nadu, and lasted only for a day, but it was brutal and shook the British East India Company. It was the first major mutiny by the Indian sepoys in the East India Company.
The immediate causes of the mutiny revolved mainly around resentment felt towards changes in the sepoy dress code, introduced in November 1805. Hindus were prohibited from wearing religious marks on their foreheads while on duty, and Muslims were required to shave their beards and trim their moustaches.
In addition General Sir John Craddock, Commander-in-Chief of the Madras Army, ordered the wearing of a round hat resembling that associated at the time with both Europeans in general and with Indian converts to Christianity. The new headdress included a leather cockade and was intended to replace the existing turban.

6. Morocco a top fertilizer producer could hold a key to the world’s food supply

Subject: Agriculture

Section: Fertilizer

Context:

Morocco has a large fertiliser industry with huge production capacity and international reach. It is one of the world’s top four fertiliser exporters following Russia, China and Canada

Concept:

Fertilisers tend to divide into three main categories; nitrogen fertilisers, phosphorus fertilisers, potassium fertilizers.

Nitrogen Fertilizer:

It is considered to be the most important nutrient, and plants absorb more nitrogen than any other element.

Nitrogen is essential to in making sure plants are healthy as they develop and nutritious to eat after they’re harvested.

Because nitrogen is essential in the formation of protein, and protein makes up much of the tissues of most living things

Phosphorus fertilizers:

Phosphorus, is linked to a plant’s ability to use and store energy, including the process of photosynthesis

It’s also needed to help plants grow and develop normally. Phosphorus in commercial fertilizers comes from phosphate rock.

Potassium fertilizers:

Potassium helps strengthen plants’ abilities to resist disease and plays an important role in increasing crop yields and overall quality.

Potassium also protects the plant when the weather is cold or dry, strengthening its root system and preventing wilt

7. Who are the Tamils of Moreh in Manipur?

Subject: Geography

Section: Mapping

Context: The Tamil community became one of the most influential communities in this border town, 110 km from the capital city of Imphal.

Important Geographical location:

Moreh:

It is a border town located on the India–Myanmar border in the state of Manipur
It is a rapidly developing trade point with an integrated customs and immigration checkpoint, plays a very important role in India’s Look East Policy
India–Myanmar–Thailand Trilateral Highway, 1,408 km, connects Imphal-Moreh in India with Mae Sot in Thailand via Mandalay-Kalewa-Yagyi in Myanmar

8. Indonesia’s new visa policy, which allows travellers to live tax-free

Subject :International Relations

Section :Msc

As Indonesia deals with the economic impacts of Covid-19, the country has announced “Digital Nomad Visas” for travellers, to attract more foreign tourists.

Who are digital nomads?

Digital nomads are defined as people who choose to embrace a location-independent, technology-enabled lifestyle that allows them to travel and work remotely, anywhere in the Internet-connected world. Unlike regular remote workers, who tend to stay in one geographic area, digital nomads travel and explore while working.

What is the “Digital Nomad Visa” Indonesia has proposed?

The Digital Nomad Visa would allow remote workers to stay in Indonesia, including Bali, tax-free.
Announced by Indonesia’s Tourism Minister Sandiaga Uno to boost tourism in the country, the visa will be applicable for five years.
This would make Indonesia’s visa one of the longest digital nomad visas compared to other countries.
Other countries offering nomad visas are Italy, Croatia, Costa Rica, Georgia, Hungary, Iceland, Mauritius, Norway, and Spain among many others.

9. Rocket fuel: Bacteria that pack a punch

Subject: Science and Technology

Section: Science

Context: Scientists at the US Lawrence-Berkeley Lab have developed a fuel from a bacterium that packs more energy than even the rocket fuels in use today.

How the common streptomyces promises to fuel rockets

This bacterium is used to make many drugs, including the familiar streptomycin.
The scientists have named the new fuel ‘POP-FAME’, for polycyclopropanated fatty acid methyl ester.
in the 1960s, the Soviet Union had developed a petroleum-based rocket fuel called Syntin and used it successfully to launch several Soyuz rockets in the 1970s.
POP-FAME’s molecular structure closely resembles Syntin’s.
At the heart of the fuel’s structure is the ‘three-carbon’ ring — a triangle with a carbon atom at each vertex. (Each carbon atom combines with two other carbon atoms and two other elements, mostly hydrogen.) This structure is called a cyclopropane; they hold potential energy in their bonds.

Types of Fuel

Longer chain fuels would be solids, well-suited to certain rocket fuel applications, shorter chains might be better for jet fuel, and in the middle might be a diesel-alternative molecule.

10. Offshore wind energy In India

Subject: Geography

Section: Physical Geography

Context:

The Ministry’s ‘Strategy Paper for Establishment of Offshore Wind Energy Projects’ demonstrates the government’s growing seriousness about offshore

Content:

Out of the total renewable energy installation capacity of 78 GW, wind energy contributes to more than 35 GW as on March 2019 and the national target is to achieve 60 GW of wind energy installations by 2022.

About Offshore Wind Energy:

Wind energy today typically comes in two different “types”: onshore wind farms which are large installations of wind turbines located on land, and offshore wind farms which are installations located in bodies of water.
Offshore wind energy refers to the deployment of wind farms inside the water bodies. They utilise the sea winds to generate electricity. These wind farms either use fixed-foundation turbines or floating wind turbines.
- A fixed-foundation turbine is built in shallow water, whereas a floating wind turbine is built in deeper waters where its foundation is anchored in the seabed. Floating wind farms are still in their infancy.
Offshore wind farms must be at least 200 nautical miles from the shore and 50 feet deep in the ocean.
- Offshore wind turbines produce electricity which is returned to shore through cables buried in the ocean floor.
The national offshore wind energy policy has been notified on October 2015 to provide a legal framework for development of the offshore wind sector in India.
Wind resource measurement campaign deploying light detection and ranging (LiDARs) along with geophysical, geotechnical, and oceanographic studies in selected zones off the coast of Gujarat and Tamil Nadu needs to be carried out.
The government has planned to develop the first offshore wind energy project of 1 GW capacity in the identified zone-B off the coast of Gujarat in a commercial scale.
Interested private players can also carry out the required studies/surveys for establishment of offshore wind projects within the EEZ of India under the ‘Guidelines for Offshore Wind Power Assessment Studies and Surveys’ issued by NIWE.

About National Institute of Wind Energy (NIWE)

National Institute of Wind Energy (NIWE) has been established in Chennai in the year 1998, as an autonomous R&D institution by the Ministry of New and Renewable Energy (MNRE), Government of India.
It is a knowledge-based institution of high quality and dedication, offers services and seeks to find complete solutions for the kinds of difficulties and improvements in the entire spectrum of the wind energy sector by carrying out further research.
It has a Wind Turbine Test Station (WTTS) at Kayathar with the technical & partial financial support by DANIDA, Govt. of Denmark.