Daily Prelims Notes 16 May 2022
- May 16, 2022
- Posted by: OptimizeIAS Team
- Category: DPN
Daily Prelims Notes
16 May 2022
Table Of Contents
- The importance of Lumbini
- Residue farming over Organic farming
- Special Drawing Rights
- Currency depreciation
- Asset Quality Review
- Impact of hike in repo rate on the fixed income investors
- First Indian Layman to be declared Saint
- UNOPS
Subject: History
Section: Art and Culture
Context:
- Prime Minister Narendra Modi’s visit to Lumbini, Nepal.
- No Indian Prime Minister has visited Lumbini in the last few decades.
Importance of Lumbini:
- The Lord Buddha was born in 623 BC in the sacred area of Lumbini located in the Terai plains of southern Nepal, testified by the inscription on the pillar erected by the Mauryan Emperor Asoka in 249 BC.
- Lumbini is one of the holiest places of one of the world’s great religions, and its remains contain important evidence about the nature of Buddhist pilgrimage centres from as early as the 3rd century BC.
- The complex of structures within the archaeological conservation area includes the Shakya Tank; the remains within the Maya Devi Temple consist of brick structures in a cross-wall system dating from the 3rd century BC to the present century and the sandstone Ashoka pillar with its Pali inscription in Brahmi script.
- Additionally there are the excavated remains of Buddhist viharas (monasteries) of the 3rd century BC to the 5th century AD and the remains of Buddhist stupas (memorial shrines) from the 3rd century BC to the 15th century AD.
- The site is now being developed as a Buddhist pilgrimage centre, where the archaeological remains associated with the birth of the Lord Buddha form a central feature.
- Unfortunately, India remains largely un- represented in Lumbini, but for a small museum building that was con- structed with Indian assistance in the late 1990s. A proposal for a ‘sound and light show’ remains in limbo.
- Both Lumbini and the Mahabodhi Temple in Bodh Gaya are UNESCO World Heritage sites.
Some important Buddhist sites in India :
India is home to some of the most sacred sites of Buddhism
- Bodh Gaya — Bodh Gaya is a holy landmark and pilgrimage destination linked with the Mahabodhi Temple Complex in Gaya, Bihar, India. It is well-known for being the location where Gautama Buddha is claimed to have acquired enlightenment under the Bodhi Tree.
- Sarnath– The Deer Park adjoining the Archaeological Complex at Sarnath that the Buddha is believed to have delivered his first sermon after he attained enlightenment under a Bodhi tree in Bodh Gaya and preached his first teachings known as Dharmachakrapravartana Sutra.
- Rajgir– It was the capital of Magadh Kingdom. It was here that Gautama Buddha spent several months meditating, and preaching at Gridhra-kuta, (Vulture peak). He also delivered some of his famous sermons and initiated king Bimbisara of Magadha and countless others to Buddhism. It was here that Budhha delivered his famous Atanatiya Sutra.
- Sravasti– It was the capital of ancient Kosala kingdom and is sacred to the Buddhists because it is here that Lord Buddha performed the greatest of his miracles to confound the Tirthika heretics. These miracles include Buddha creating multiple images of himself, which has been a favourite theme of Buddhist art. Buddha showed his divine prowess to impress upon the non-believers. The Buddha passed the greater part of his monastic life in Sravasti.
- Vulture peak– One of the several sites frequented by the Buddha and his community of disciples for both training and retreat.
- Kesariya – Kesariya Stupa is a Buddhist stupa in Kesariya. The first construction of the Stupa is dated to the 3rd century BCE. Kesariya Stupa has a circumference of almost 400 feet (120 m) and rises to a height of about 104 feet.
- Vaishali– It is said that the Buddha visited this place thrice and spent quite a long time here. The Buddha also delivered his last sermon at Vaishali and announced his Nirvana here.
- Kushinagar– It is one of the four sacred places of Lord Buddha. Buddha delivered his last sermon, attained Mahaparinirvana (salvation) in 483 BC and was cremated at Rambhar Stupa.
2. Residue farming over Organic farming
Subject: Agriculture
Section: Types
Residue farming | Organic farming: |
It entails the protection and growth improvement of seedlings and plants by using organically procured bio-fertilisers and biocides | It is an agricultural system that relies on pest controls and bio-fertilisers that are obtained from animal and plant waste. |
Synthetic pesticides are applied at predetermined intervals conforming to the (MRL) Maximum Residue Level. | It involves the plantation of nitrogen-fixing cover crops. |
Advantages of Residue farming over Organic farming:
- Since Residue farming does not involve any toxin throughout the production process, the overall nutritional value and quality of fruits and vegetables produced is high. While there is no clear indicator that organic products are high in nutrition.
- The yield capacity of organic farming is poor and the markup of organic products is as high as 40% due to expensive production, while Residue-free techniques are economical, and they do not hamper production quantity.
- Though organic farming eradicates the use of chemical fertilizers and pesticides, the cost of doing so is very high as the yield is insufficient. Residue-free practices entail minimal or no usage of chemicals, and it leaves no harmful traces behind.
- Also, Developed countries encourage and promote residue-free crops, thus promoting them in India will boost Indian food exports.
Government efforts to promote Residue-free farming:
- The ₹2,200-crore State of Maharashtra Agribusiness and Rural Transformation (SMART) project plans to supply the urban population of Pune residue-free produce.
- The Centre has launched the All India Network Project on Pesticide Residues (AINP-PR) to combat pesticide contamination in several food commodities.
- FSSAI has introduced a list of crop contaminants and their acceptable levels.
- To make indigenous produce more competitive in the export market, FSSAI has issued a set of MRLs for the compliance of domestic producers.
Subject: Economy
Section: External Sector
Why in the news?
- The IMF raised the yuan’s weighting to 12.28 per cent from 10.92 in its first regular review of the SDR evaluation since the Chinese currency was included in the basket in 2016, the People’s Bank of China said in a statement Sunday.
- The weighting of the US dollar rose to 43.38 per cent from 41.73 per cent, while those of euro, Japanese yen and British pound declined.
- The ranking of the currencies’ weighting remains the same after the review as neither the pandemic nor developments in financial technology have had any major impact on the relative role of currencies in the SDR basket.
- The change will be effective Aug 1, and the next review will be in 2027.
Concept:
- The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves.
- The SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system, the SDR was redefined as a basket of currencies.
- The value of the SDR is based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.
- The yuan’s entry into the SDR signaled it became one of the five global reserve currencies in 2016, after years of effort by Chinese authorities to promote its global use.
- Currencies included in the SDR basket have to meet two criteria: the export criterion and the freely usable criterion.
- A currency meets the export criterion if its issuer is an IMF member or a monetary union that includes IMF members, and is also one of the top five world exporters.
- For a currency to be determined “freely usable” by the IMF, it has to be widely used to make payments for international transactions and widely traded in the principal exchange markets. Freely usable currencies can be used in Fund financial transactions.
- The SDR serves as the unit of account of the IMF and other international organizations.
- The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. SDRs can be exchanged for these currencies.
- The SDR basket is reviewed every five years, or earlier if warranted, to ensure that the basket reflects the relative importance of currencies in the world’s trading and financial systems.
- The actual weights of currencies in the basket fluctuate as cross-exchange rates among the basket currencies move. The value of the SDR is determined daily based on market exchange rates.
SDR allocation:
The Articles of Agreement, determine that under certain conditions the IMF may allocate SDRs to members participating in the SDR Department.
- A general allocation of SDRs must be consistent with the objective of meeting the long-term global need to supplement existing reserve assets. The allocation is distributed to member countries in proportion to their quota shares at the Fund.
- A special one-time allocation in 2009 enabled countries that joined the IMF after 1981 (i.e., after previous allocations) to participate in the SDR system on an equitable basis.
Participating members and prescribed holders can buy and sell SDRs in the voluntary market. If required, the IMF can also designate members to buy SDRs from other participants.
Subject: Economy
Section:
Why in the news?
The rupee’s depreciation against the US dollar may hold little upside for India as exports seem unlikely to benefit.
Causes:
- Global supply chain constraints -Lockdowns in China aimed at containing the Covid spread have slowed operations at key ports and affected global supply chains.
- Fall in currency values of competitors-Most of our competing export nations are in South Asia or Southeast Asia and their currencies have also depreciated
- High commodity prices and inputs
Impact of depreciation:
- Rise in import and current account deficit
- The depreciation of the rupee is also set to make outward remittances,
including those to students in the US, more expensive.
Subject: Economy
Section: Monetary Policy
The RBI governor will meet chiefs of public sector banks (PSBs) on May 17 to review credit flow and assess the outlook on asset quality.
The Governor will also review PSBs’ collection efficiencies, consumer grievance redress mechanism, digital banking units, lending to government entities, IT infrastructure and cyber security framework and any issue that the lenders may like to present along with strategies to deal with the rising interest rate scenario without upsetting growth dynamics.
Background
With the regulatory forbearance coming to an end in 2015, RBI started the Asset Quality Review to ensure that banks were taking proactive steps to clean up their balance sheets.
The RBI together with the senior national supervisors carried out financial health checks of the banks it supervises directly. These comprehensive assessments help to ensure that the banks are adequately capitalized and can withstand possible financial shocks.
AQR:
Inspectors from the Reserve Bank of India (RBI) typically review bank records once a year as part of the Annual Financial Inspection (AFI) process. A small sample of loans is evaluated in a routine AFI to see if asset classification matches loan repayment and if banks have made necessary reserves.
However, the sample size in the AQR, on the other hand, was substantially larger, and most of the large borrower accounts were investigated to see if categorisation complied with prudential standards.The main aspect of AQR is that it is a random check rather than a periodic check.
Classification of assets:
- Standard Assets-An asset which does not have more than normal risk attached to the business, and the one which does not disclose any problems is known as a standard asset.
- Non-Performing Assets (NPA) are loans and arrears lent by the banks or financial institutions whose principal and interests are delayed beyond 90 days.
The Classification of NPA is based on the number of days the payment of principal and interest is due. It is classified as Substandard assets, Doubtful assets, and Loss assets:
- Sub-standard: When the NPAs have aged <= 12 months.
- Doubtful: When the NPAs have aged > 12 months.
- Loss assets: When the bank or its auditors have identified the loss, but it has not been written off.
Stressed assets-The classification of Special Mention Accounts (SMA) was introduced by the RBI in 2014, to identify those accounts that have the potential to become an NPA/Stressed Asset. As per the SMA regulations, banks should identify potential stress in the account by creating a new sub-asset category viz. ‘Special Mention Accounts’ (SMA).
There are four types of Special Mention Accounts – SMA-NF, SMA 0, SMA1 and SMA 2.
- SMA-0-Principal or interest payment overdue between 1-30 days.
- SMA -1- Principal or interest payment overdue between 31-60 days.
- SMA-2-Principal or interest payment overdue between 61-90 days.
- SMA-NF-some ‘Special Mention’ assets are identified on the basis of other factors that reflect sickness/irregularities in the account (SMA -NF).
6. Impact of hike in repo rate on the fixed income investors
Subject: Economy
Section: Monetary Policy
RBI’s repo rate moves are supposed to send out signals for banks to follow:
- Bank fixed deposit (FD) rates are usually quite slow to respond to RBI moves, especially when there is an increasing trend.
- Post office schemes-The interest rates on post office schemes such as Post Office Time Deposits, Monthly Income Account, National Savings Certificates (NSC), Senior Citizens Savings Scheme (SCSS) and PPF are reset every quarter by the government.
The rates on post office instruments are supposed to be linked to market yields on government securities of different tenures. Therefore, given that market yields on government bonds have gone up sharply in the last six months, the rates on post office schemes are overdue for upward revision.
7. First Indian Layman to be declared Saint
Subject: History
Section: Personality
Context: Devasahayam Pillai, who embraced Christianity in the 18th century, became the first Indian layman to be declared a saint by Pope Francis during an impressive canonisation ceremony at the Vatican on 15th May.
Concept:
- Devasahayam Pillai was born in 1712 as Neelakanta Pillai into a Hindu Nair family, at Nattalam in Kanyakumari district (erstwhile Travancore kingdom), Tamilnadu.
- He was an official in the court of Travancore’s Maharaja Marthanda Varma when he was instructed into the Catholic faith by a Dutch naval commander in 1745.
- He took the name “Lazarus”, or “Devasahayam” in Malayalam, which translates to “God is my help”.
- While preaching, he particularly insisted on the equality of all people, despite caste differences. This aroused the hatred of the higher classes, and he was arrested in 1749. After enduring increasing hardships, he received the crown of martyrdom when he was shot on January 14, 1752.
- Devasahayam was recommended for the process of Beautification by the Vatican in 2004 and was declared Blessed on December 2, 2012, in Kottar, 300 years after his birth.
Subject: International Relations
Section: International Organizations
Context: A $60-million scandal involving loans and grants by a little-known UN company additionally included a $2.5 million funding to construct reasonably priced homes in India in 2019 — none of which have been materialised.
Concept:
Background:
- The United Nations Office for Project Services (UNOPS), which offers with operational initiatives, had entrusted complete sum to a single British businessman and now faces $22 million in dangerous money owed, as per a New York Times Report.
- A Singapore-based agency, owned by the businessman was answerable for getting at the least 50,000 homes in-built Goa for $2.5 million.
- The undertaking was underneath the Sustainable Infrastructure Impact Investments (S3I) initiative, launched in 2018.
- A senior Goa authority official confirmed that a presentation was made to officers by SHS Holdings (administrator of this agency) for the development of the proposed housing models in Goa.
- However, officers had questioned how supporting infrastructure like energy and roads could be made out there for the housing models additionally and how the federal government may award such a big housing undertaking to a non-public agency with no tendering undertaking.
UNOPS:
- It is an operational arm of the United Nations, (established in 1973) dedicated to implementing projects for the United Nations System, international financial institutions, governments and other partners around the world.
- Headquarters: Copenhagen, Denmark.
- It is in charge of disbursing more than $2 billion worth of development projects and contracts for its partners every year. Its activities have ranged from managing the construction of schools in Afghanistan, to building shelters in Haiti, to procuring ambulances to support the Ebola response in Liberia.
- It is a member of UNSDG and works closely with UNDP, Department of Peace operations (DPO) and the World Bank.
- It is committed to helping find innovative financing solutions that will connect a wide range of stakeholders from both public and private sectors, as well as bilateral donors and governments, to form new partnerships for sustainable
- Financing: It is not-for-profit, self- financing organization. It covers direct and indirect costs by charging a fee on each project supported.
- The following entities are currently under hosting agreements by UNOPS, grouped by theme:
- Health: RBM Partnership to End Malaria, Stop TB Partnership, Defeat-NCD Partnership
- Nutrition: Scaling Up Nutrition (SUN) Movement
- Water and sanitation: Water Supply and Sanitation Collaborative Council (since 2009)
- Sustainable urban development (Cities Alliance)
- Disaster displacement (Platform on Disaster Displacement)
- In addition, the Un- Water Secretariat is administered by UNOPS.