Daily Prelims Notes 12 July 2022

July 12, 2022
Posted by: OptimizeIAS Team
Category: DPN

Daily Prelims Notes

12 July 2022

Table OF Contents

1. Settlement of international trade in rupees

Subject: Economy

Context:

In a circular issued to commercial banks on Monday, the RBI said all exports and imports under this arrangement may be denominated and invoiced in rupee (INR).

Cause:

Currency depreciation- increasing pressure on the Indian currency in the wake of Russia’s invasion of Ukraine and sanctions by the US and the EU.
Promote international trade-facilitate importers and exporters to avoid rules that prevent the use of a global currency such as the US dollar for trade with certain countries.

Mechanism:

The Reserve Bank of India (RBI) has put in place a mechanism to settle international trade in rupees.
Exchange rate between the currencies of the two trading partner countries may be market determined.
For settlement of trade transactions with any country, AD (Authorised Dealer) banks in India may open special rupee vostro accounts of correspondent banks of the partner trading country.
Indian importers undertaking imports shall make payment in INR which should be credited into the special vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller /supplier.
Indian exporters, undertaking exports of goods and services, should be paid the export proceeds in INR from the balances in the designated special vostro account of the correspondent bank of the partner country.
Exporters may receive advance payment against exports from overseas importers in Indian rupees through the rupee payment mechanism given payment obligations arising out of already executed export orders have been made.
Further, advance is released only as per the instructions of the overseas importer and advice received from the correspondent bank before releasing the advance.
Approval of RBI-Bank of a partner country may approach an AD bank in India for opening of a special INR Vostro account and the corresponding AD bank in turn will seek approval from the Reserve Bank with details of the arrangement.
Exclusion-Correspondent bank must not be from Financial Action Task Force -high risk and non cooperative jurisdictions on which FATF has called for counter measures.
Issuance of bank guarantee for trade transactions, undertaken through this arrangement, is permitted subject to adherence to provisions of FEMA notification.

Concept :

Determination of exchange rate between two currency:

Exchange rate between two currencies (other than one being the US$) is derived indirectly.
For example-Rupee-Rouble exchange rate
- Suppose, INR-dollar is Rs 77 and Rouble-dollar is 110. Ergo, Russians have to shell out 1.428 (110 by 77) Roubles for every INR.

Authorised Dealers:

Authorised dealers are the institutions that have the license from the RBI to sell and buy foreign currencies. Most of the authorised dealers are banks.
As per the Foreign Exchange Management Act, 1999, the Reserve Bank, on an application, may authorise any person to be known as an authorised person, to deal in foreign exchange as an Authorised Dealer.
There are three types of authorised dealers, depending upon the type of institutions.
- Category I Authorised Dealers are select banks who can carry out all permissible current and capital account transactions as per directions issued from time to time. There are 106 authorised dealers of Category -I as per the RBI regulations.
- Category II are select entities to carry out specified non-trade related current account transactions, all the activities permitted to Full Fledged Money Changers and any other activity as decided by the Reserve Bank.
- Category III ADs are select financial and other institutions (as Authorised Dealers Category-III) to carry out specific foreign exchange transactions incidental to their business / activities.

Vostro account:

Vostro is a Latin word that translates to “your,” as in “your account.”
A vostro account is an account a correspondent bank holds on behalf of another bank.
A vostro account is established to enable a foreign correspondent bank to act as an agent or provide services as an intermediary for a domestic bank.
Vostro account services include executing wire transfers, performing foreign exchange transactions, enabling deposits and withdrawals, and expediting international trade.
For example, if a Spanish life insurance company approaches a U.S. bank to manage funds on the Spanish life insurer’s behalf, the account is deemed by the holding bank as a vostro account of the insurance company.
From the foreign correspondent bank’s point of view, the funds held on behalf of other banks are referred to as vostro accounts and are denominated in the local currency. From the perspective of domestic banks, the funds deposited at correspondent banks are referred to as nostro accounts. Nostro accounts are denominated in the foreign currency of the correspondent bank.

2. The Financial Stability Board (FSB) and crypto-assets

Subject: Economy

Context:

The Financial Stability Board (FSB), on Monday, said it will report to the G20 Finance Ministers and central bank Governors in October on the regulatory and supervisory approaches to stable coins and other crypto assets.

Concept:

The Financial Stability Board

It was established after the G20 London summit in April 2009as a successor to the Financial Stability Forum (FSF).
The Financial Stability Board is headquartered in Basel, Switzerland.
It is hosted and funded by the Bank for International Settlements, and is established as a not-for-profit association under Swiss law.
The Board includes all G20 major economies, FSF members, and the European Commission.
The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system.
More specifically, the FSB was established to:
- Assess vulnerabilities affecting the global financial system as well as to identify and review, on a timely and ongoing basis within a macroprudential perspective, the regulatory, supervisory and related actions needed to address these vulnerabilities and their outcomes.
- Promote coordination and information exchange among authorities responsible for financial stability.
- Monitor and advise on market developments and their implications for regulatory policy.
- Monitor and advise on best practice in meeting regulatory standards.
- Undertake joint strategic reviews of the international standard-setting bodies and coordinate their respective policy development work to ensure this work is timely, coordinated, focused on priorities and addresses gaps.
- Set guidelines for establishing and supporting supervisory colleges.
- Support contingency planning for cross-border crisis management, particularly with regard to systemically important firms.
- Collaborate with the International Monetary Fund (IMF) to conduct Early Warning Exercises.
- Promote member jurisdictions’ implementation of agreed commitments, standards and policy recommendations, through monitoring of implementation, peer review and disclosure.
The FSB’s structure comprises the Plenary as the sole decision-making body, a Steering Committee to take forward operational work in between Plenary meetings, and three Standing Committees, each with specific but complementary responsibilities towards the above process:
- The Standing Committee on Assessment of Vulnerabilities (SCAV), which is the FSB’s main mechanism for identifying and assessing risks in the financial system.
- The Standing Committee on Supervisory and Regulatory Cooperation (SRC), which is charged with undertaking further supervisory analysis or framing a regulatory or supervisory policy response to a material vulnerability identified by SCAV.
- The Standing Committee on Standards Implementation (SCSI), which is responsible for monitoring the implementation of agreed FSB policy initiatives and international standards.
The FSB’s decisions are not legally binding on its members – instead the organisation operates by moral suasion and peer pressure, in order to set internationally agreed policies and minimum standards that its members commit to implementing at national level.
Unlike most multilateral financial institutions, the FSB lacks a legal form and any formal power, given that its charter is an informal and nonbinding memorandum of understanding for cooperation adopted by its members.
The FSB has 68 member institutions, comprising ministries of finance, central banks, and supervisory and regulatory authorities from 25 jurisdictions as well as 10 international organizations and standard-setting bodies, and 6 Regional Consultative Groups reaching out to 65 other jurisdictions around the world.
Organizations
- Bank for International Settlements
- European Central Bank
- European Commission
- International Monetary Fund
- Organisation for Economic Co-operation and Development
- The World Bank
Standard-setting bodies
- Basel Committee on Banking Supervision
- International Association of Insurance Supervisors
- International Organization of Securities Commissions

Crypto-assets:

Crypto assets are purely digital assets that use public ledgers over the internet to prove ownership.
They use cryptography, peer-to-peer networks and distributed ledger technology (DLT) – such as blockchain – to create, verify and secure transactions.
They can have different functions and characteristics: they may be used as a medium of exchange; a way to store value; or for other business purposes.
Crypto assets generally operate independently of a central bank, central authority or government.
Some of the more common types of crypto assets are:
- Cryptocurrency
- Utility Tokens
- Security Tokens
- Non-Fungible Tokens
- Stable coins
A simpler way to understand a crypto asset is that they are digital assets except:
- Crypto assets use cryptography
- This kind of asset depends on distributed ledger technology.
- One does not need a third such as a bank to issue crypto assets like what happens with bitcoins.
- Crypto assets have three primary uses: as an investment, a means of exchange, and to access goods and services.

3. Parliamentary Consultative Committee

Subject: Polity

Context:

Defence Minister Rajnath Singh on Monday gave a presentation on the Agnipath scheme of recruitment to the armed forces to the Parliamentary Consultative Committee.

About Consultative Committees:

These are attached to the various ministries/department of the Central government
Its membership encompasses members of both the houses.
The Minister/Minister of State-in-Charge is the chairperson.
It is a platform for informal consultations between government and members on policies and their implementation.
These committees are formed by the Ministry of Parliamentary Affairs who formulate guidelines for composition, structure and procedure as well. It is also responsible of holding of meeting during as well as between sessions.
It is constituted normally after the formation of new Lok Sabha. Currently around 32 such committees are there.
Sometimes informal consultative committees for railway zones are formed during session period only with MPs of the zone nominated as member

4. SC sentences Mallya to four months in jail

Subject :Polity

Section : Judiciary

Context: The Supreme Court, on Monday, sentenced fugitive businessman Vijay Mallya to four months in jail for committing contempt of court.

Content:

The bench said the fine shall be deposited in the apex court registry within four weeks and upon such deposit, the amount shall be made over to the Supreme Court Legal Services Committee.

As per Article 39-A of the Indian Constitution, the State shall secure that the operation of the legal system promotes justice on the basis of equal opportunity, and shall, in particular, provide free legal aid, by suitable legislation or schemes or in any other way, to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities.

Supreme Court Legal Services Committee, is an effort to provide legal aid and assistance to the marginalized and weaker sections of the Society.

Supreme Court is the last Court of Justice in the country.

The aim of providing free legal aid to the people at large would have remained unaccomplished, if this right was unavailable to the masses for approaching the highest Court of Justice – the Supreme Court.

With a purpose of providing free legal aid to the persons (eligible under Section 12 of Legal Service Authorities Act, 1987), (hereinafter referred to as Act for brevity) Supreme Court Legal Services Committee (hereinafter referred to as SCLSC for brevity) was constituted, to approach Hon’ble Supreme Court.

The Supreme Court Legal Services Committee, has been constituted under Section 3A of the Act, for providing free and competent Legal Services to the weaker sections of the Society in the cases which fall under the jurisdiction of Hon’ble Supreme Court of India.

The Committee consists of –

A sitting Judge of Hon’ble Supreme Court, who is the Chairman and 9 members nominated by Hon’ble the Chief Justice of India.

The National Legal Services Authority (NALSA) has been constituted under the Legal Services Authorities Act, 1987 to provide free Legal Services to the weaker sections of the society and to organize Lok Adalats for amicable settlement of disputes.

Hon’ble Mr. Justice N. V. Ramana, The Chief Justice of India is the Patron-in-Chief. NALSA is housed at Supreme Court of India, Tilak Marg, New Delhi, Delhi(110001).

In every State, State Legal Services Authority has been constituted to give effect to the policies and directions of the NALSA and to give free legal services to the people and conduct Lok Adalats in the State. The State Legal Services Authority is headed by Hon’ble the Chief Justice of the respective High Court who is the Patron-in-Chief of the State Legal Services Authority.

In every District, District Legal Services Authority has been constituted to implement Legal Services Programmes in the District. The District Legal Services Authority is situated in the District Courts Complex in every District and chaired by the District Judge of the respective district.

Taluk Legal Services Committees are also constituted for each of the Taluk or Mandal or for group of Taluk or Mandals to coordinate the activities of legal services in the Taluk and to organise Lok Adalats. Every Taluk Legal Services Committee is headed by a senior Civil Judge operating within the jurisdiction of the Committee who is its ex-officio Chairman

Section 12 of the Legal Services Authorities Act, 1987 prescribes the criteria for giving legal services to the eligible persons. Section 12 of the Act reads as under:-Every person who has to file or defend a case shall be entitled to legal services under this Act if that person is –

A member of a Scheduled Caste or Scheduled Tribe;
A victim of trafficking in human beings or begar as referred to in Article 23 of the Constitution;
A woman or a child;
A mentally ill or otherwise disabled person;
A person under circumstances of undeserved want such as being a victim of a mass disaster, ethnic violence, caste atrocity, flood, drought, earthquake or industrial disaster.
An industrial workman;
In custody, including custody in a protective home within the meaning of clause
Of section 2 of the Immoral Traffic (Prevention) Act, 1956 (104 of 1956); or in a juvenile home within the meaning of clause
Of section 2 of the Juvenile Justice Act, 1986 (53 of 1986) or in a psychiatric hospital or psychiatric nursing home within the meaning of clause (g) of section 2 of the Mental Health Act, 1987 (14 of 1987); or
In receipt of annual income less than rupees nine thousand or such other higher amount as may be prescribed by the State Govt., if the case is before a court other than the Supreme Court, and less than rupees twelve thousand or such other higher amount as may be prescribed by the Central Govt., if the case is before the Supreme Court.” (Rules have already been amended to enhance this income ceiling).

According to section 2(1) (a) of the Act, legal aid can be provided to a person for a ‘case’ which includes a suit or any proceeding before a court. Section 2(1) (aaa) defines the ‘court’ as a civil, criminal or revenue court and includes any tribunal or any other authority constituted under any law for the time being in force, to exercise judicial or quasi-judicial functions. As per section 2(1)(c) ‘legal service’ includes the rendering of any service in the conduct of any case or other legal proceeding before any court or other authority or tribunal and the giving of advice on any legal matter.

Legal Services Authorities after examining the eligibility criteria of an applicant and the existence of a prima facie case in his favour provide him counsel at State expense, pay the required Court Fee in the matter and bear all incidental expenses in connection with the case. The person to whom legal aid is provided is not called upon to spend anything on the litigation once it is supported by a Legal Services Authority.

After the constitution of the Central Authority and the establishment of NALSA office towards the beginning of 1998, following schemes and measures have been envisaged and implemented by the Central Authority:-

Establishing Permanent and Continuous Lok Adalats in all the Districts in the country for disposal of pending matters as well as disputes at pre-litigative stage;
Establishing separate Permanent & Continuous Lok Adalats for Govt. Departments, Statutory Authorities and Public Sector Undertakings for disposal of pending cases as well as disputes at pre-litigative stage;
Accreditation of NGOs for Legal Literacy and Legal Awareness campaign;
Appointment of “Legal Aid Counsel” in all the Courts of Magistrates in the country;
Disposal of cases through Lok Adalats on old pattern;
Publicity to Legal Aid Schemes and programmes to make people aware about legal aid facilities;
Emphasis on competent and quality legal services to the aided persons;
Legal aid facilities in jails;
Setting up of Counseling and Conciliation Centers in all the Districts in the country;
Sensitisation of Judicial Officers in regard to Legal Services Schemes and programmes;
Publication of “Nyaya Deep“, the official newsletter of NALSA;
Enhancement of Income Ceiling to Rs.1,25,000/- p.a. for legal aid before Supreme Court of India and to Rs.1,00,000/- p.a. for legal aid upto High Courts; and
Steps for framing rules for refund of court fees and execution of Awards passed by Lok Adalats.

5. Pressing need for law in India to streamline grant of bails, says SC

Subject :Polity

Section : constitution

Context: Supreme Court on Monday said“there is a pressing need”for a bail law in the country to “streamline the grant of bails”

Bail denotes provisional release of accused in Criminal Case in which court the trial is pending and the Court is yet to announce judgement.

There are 3 types of bail Regular, Interim and Anticipatory.

Interim bail

Interim bail is granted for a short period of time and it is granted before the hearing for the grant of regular or anticipatory bail.

Anticipatory Bail

If any person has reason to believe that he/she may be arrested for non-bailable offence, he/she may apply to Sessions court or High court for anticipatory bail praying that in the event of arrest, he/she shall be released on bail. (Section 438 Cr.PC).

Q. Do I need to get a regular bail, when I already have an anticipatory bail?

A. No, you don’t need to take regular bail, your anticipatory bail shall remain valid till the trial procedure ends, unless the court cancels it. In such cases, the anticipatory bail is converted into regular bail at the instance of the Court.

Q. What is the maximum period for which an under trial prisoner can be detained?

A. As per section 436A of Cr.P.C under trial prisioner shall be released on bail by Court, if he has served one half of the maximum term of sentence as may be required to serve if such person would have served as punishment if convicted.

Q. Can I get bail, if I am accused for non-bailable offence?

A. Yes. Accused can get bail for a non- bailable offence. Bail can be obtained from Sessions Court or High Court, depending upon seriousness of the offence the accused is charged with and discretion of court. Bail is a rule, jail is exception.

Q. Do I need to get bail in bailable offence?

A. Yes you must get bail if you have been charged with bailable offence, for bailable offence you don’t need to go to court, it is given by the Police Officer.

Q. When can bail be refused by Courts?

A. Accused shall not be released if there appears grounds for believing that he is guilty of offence punishable with death or imprisonment for life. A person shall not be released if offence is cognizable and he had been previously convicted of an offence punishable with death, imprisonment for life or imprisonment for seven years or more, or he had been previously convicted on two or more occasions.

Q. What is cancellation of bail?

A. Court has the power to cancel the bail even at later stage. This power is available to the court under Sections 437(5) and 439(2) of Cr PC. By recording reasons the Court can cancel the bail granted by it and give direction to police to arrest the person.

6. Reading UN population report

Subject: IR

Context:

Context:The World Population Prospects 2022 has projected that India will surpass China as the world’s most populous country in 2023, while the global population will reach 8 billion this year.

What is the WPP?

The Population Division of the UN Department of Economic and Social Affairshas been publishing the WPP in a biennial cycle since1951.
Each revision of the WPP provides a historical time series of population indicators starting in 1950. It does so by taking into account newly released national data to revise estimates of Past trends in fertility, mortality or international migration.

Key takeaways from the report:

The global population is expected to grow to around 8.5 billion in 2030, 9.7 billion In 2050 and 10.4 billion in 2100.
More than half of the projected increase in global population up to 2050 will be concentrated in just eight countries: the Democratic Republic of the Congo, Egypt, Ethiopia, India, Nigeria, Pakistan, the Philippines and the United Republic of Tanzania.
The population of older persons is increasing both in numbers and as a share of the total. The share of the global population aged 65 years or above is projected to rise from 10% in 2022 to 16% in 2050.
Sustained drop in fertility has led to an increased concentration of the Population at working ages (between 25 and 64 years), creating an opportunity for accelerated economic growth per capita. This shift in the age distribution provides a time bound opportunity for accelerated economic growth known as the “demographic dividend”.
For high-income countries between 2000 and 2020, the contribution of international migration to population growth (net inflow of 80.5 million) exceeded the balance of births over deaths (66.2 million. Over the next few decades, migration will be the sole driver of population growth in high-income countries.

7. Interpol’s ICSE initiative on child sex abuse, now joined by the CBI

Subject: IR

Context:

Context: India’s Central Bureau of Investigation has joined the Interpol’s International Child Sexual Exploitation (ICSE) initiative that will allow it to collaborate with investigators in other countries for detecting child sex abuse online and identifying abusers, victims, and crime scenes from audio-visual clips using specialized software.

What is the ICSE database that the CBI has joined?

The ICSE database uses video and image comparison to analyse Child Sex Exploitation Material (CSEM) and make connections between victims, abusers and places

The database avoids duplication of effort and saves precious time by letting investigators know whether a series of images has already been discovered or identified in another country, or whether it has similar features to other images

Using the image and video comparison software, the investigators attempt to identify locations of markers visible in a piece of media. This can be through the signage nearby, the kind of artwork, photos on a wall, etc.

Concept:

What is Interpol?

Interpol is the world’s largest international police organization with 195 member countries

It is headquartered in Lyon, France

Each member country hosts an Interpol National Central Bureau that connects their national law enforcement to it

In India, the CBI is the nodal agency.

Central Bureau Investigation (CBI):

It is the premier investigating agency of India.

It operates under the jurisdiction of the Ministry of Personnel, Public Grievances and Pensions

The legal powers of investigation of the CBI are derived from the DSPE Act 1946, which confers powers, duties, privileges and liabilities on the Delhi Special Police Establishment (CBI)

CBI is exempted from the provisions of the Right to Information Act

CBI is India’s officially designated single point of contact for liaison with the Interpol

8. The search for dark matter

Subject: Science & Tech.

Context:

A next-generation dark matter detector has started operations, already delivering its first results, which show it to be the most sensitive machine of this type on Earth

What is LUX-ZEPLIN experiment?

The LUX-ZEPLIN detector is set up to specifically search for a hypothesized type of dark matter called weakly interacting massive particles, or WIMPs

These particles are expected to collide with matter very rarely and interact extremely weakly when they do.

No dark matter particles have currently been directly detected, but the hope is that the LZ detector could change that by detecting the faint interactions of these mysterious particles with xenon atoms

This requires a sensitive detector with all possible noise that could interfere with detection eliminated.

The LZ experiment’s xenon is in two nested titanium tanks containing ten tons of the elements in its liquid state.

These tanks are monitored by two photo multiplier tube (PMT) arrays which are poised to detect faint sources of light

It is Located deep below the Black Hills of South Dakota, US. The underground location of the dark matter detector helps protect it from high-energy protons and atomic nuclei that move through space at nearly the speed of light

What is Dark Matter?

Dark matter makes up around 85% of the matter in the known universe, but because it doesn’t interact with light it is practically invisible.

Likewise, whatever the constituent particles of dark matter are, they don’t interact strongly with other matter either.

The only way scientists can infer the presence of dark matter is via its gravitational influence which literally holds together most galaxies, preventing their constituent stars from flying apart as they spin.

Dark matter isn’t made up of protons and neutrons like the everyday matter

9. James Webb Space Telescope

Subject: Science & Tech.

Context:

The United States space research agency NASA said in a release on Monday (July 11) that its James Webb Space Telescope (JWST) has produced the deepest and sharpest infrared image of the distant universe that has ever been seen, heralding a major event in astronomy. The JWST is the largest and most powerful telescope ever built.

What is NASA’s James Webb Telescope?

It was launched aboard a rocket on December 25, 2021, and is currently at a point in space known as the Sun-Earth L2 Lagrange point, approximately 1.5 million km beyond Earth’s orbit around the Sun.

Lagrange Point 2 is one of the five points in the orbital plane of the Earth-Sun system. Named after Italian-French mathematician Josephy-Louis Lagrange, the points are in any revolving two-body system like Earth and Sun, marking where the gravitational forces of the two large bodies cancel each other out. Objects placed at these positions are relatively stable and require minimal external energy or fuel to keep themselves there, and so many instruments are positioned here.

L2 is a position directly behind Earth in the line joining the Sun and the Earth. It would be shielded from the Sun by the Earth as it goes around the Sun, in sync with the Earth.

Mission of the James Webb Space Telescope

NASA says the James Webb Space Telescope will be “a giant leap forward in our quest to understand the Universe and our origins”, as it will examine every phase of cosmic history: from the Big Bang to the formation of galaxies, stars, and planets to the evolution of our own Solar System.

The science goals for the Webb can be grouped into four themes. The first is to look back around 13.5 billion years to see the first stars and galaxies forming out of the darkness of the early universe. Second, to compare the faintest, earliest galaxies to today’s grand spirals and understand how galaxies assemble over billions of years. Third, to see where stars and planetary systems are being born. And fourth, to observe the atmospheres of extra solar planets (beyond our solar system), and perhaps find the building blocks of life elsewhere in the universe. The telescope will also study objects within our own Solar System.

How JSWT is different from other Telescope

The JWST will be able to see right through and into massive clouds of dust that are opaque to earlier generation visible-light observatories like the Hubble Telescope. Another difference is that the Webb is equipped with cameras and other instruments sensitive to infrared or “heat” radiation, and the Hubble is not.