Daily Prelims Notes 19 February 2022
- February 19, 2022
- Posted by: OptimizeIAS Team
- Category: DPN
Daily Prelims Notes
19 February 2022
Table Of Contents
- LIC’s MEGA IPO
- CPI (CONSUMER PRICE INDEX)
- ELEPHANT CORRIDORS
- REGULATIONS REVIEW AUTHRITY (RRA 2.0)
- WILDFIRES in SAVANNAH
- INTELLECTUAL PROPERTY (IP)
Context: LIC’s IPO, which is likely to run from March 10-14, can raise as much as 25 percent of the total capital raised in India last year.
- In 2021, India saw a record total capital-raise of $34 billion, of which IPOs accounted for $16 billion.
What is an IPO?
- An IPO or initial public offering is the process by which a privately held company, or a company owned by the government such as LIC, raises funds by offering shares to the public or to new investors.
- Following the IPO, the company is listed on the stock exchange.
- Offer for Sale is a type of IPO. In both cases, new shares are put on the market for the public to buy.
Which companies can come out with an IPO?
- Sebi has laid down rules that require companies to meet certain criteria before they can go to the public to raise funds.
- The company must have net tangible assets of at least Rs 3 crore, and net worth of Rs 1 crore in each of the preceding three full years, and it must have a minimum average pre-tax profit of Rs 15 crore in at least three of the immediately preceding five years.
Where do the proceeds of the IPO go?
- If the issue raises fresh capital, the proceeds of the IPO go to the company, and can be utilised for future growth, expansion, debt reduction, etc.
- If the issue involves an offer for sale by promoters or existing investors, then the money goes to them and not to the company.
- In the case of LIC, the issue is an offer for sale by the government, and the IPO proceeds will go to the Government of India.
Who fixes the price of securities in an issue?
- The per-share price of the public issue is fixed by the issuer in consultation with the merchant banker based on assets, revenues, profits, and future cash flow projections, and the total value of the company.
- The regulator, SEBI, does not play a role in price fixation.
What are the advantages of listing a company?
- Listing on the stock exchange helps a company raise capital, and diversify and broaden its shareholder base.
- A listed company can raise share capital for growth and expansion in the future through a follow-on public offering or FPO.
Who can invest in an IPO?
- Qualified institutional buyers (QIBs) is a category of investors that includes foreign portfolio investors (FPIs), mutual funds, commercial banks, insurance companies, pension funds, etc.
- All individuals who invest up to Rs 2 lakh in an issue are classified as retail investors.
- Retail investors investing above Rs 2 lakh are classified as high net worth individuals.
IPO vs OFS:
|● Initial Public Offer||● Offer for Sale|
|● Initial Public Offering (IPO) essentially refers to the process of offering shares of a private corporation to the public in a new stock issuance.||● In Offer For Sale (OFS), promoters of a company dilute their stake by selling their shares on an exchange platform. This does not entail fresh fundraising. An existing shareholder dilutes his/her stake through the primary market. An OFS primarily only results in a transfer of ownership from one shareholder to another. It does not increase the company’s share capital.|
|● An organisation uses an IPO as an option to raise capital for its development and expansion needs.||● An OFS aims to furnish investors holding over 10% with a simple choice to sell their stake in the organisation.|
Context- The all-India Consumer Price Index for Agricultural and Rural Labourers (CPI- AL & RL) continued to decrease in January.
- The fall came from food group due to decrease in prices of pulses, mustard-oil, fresh ﬁsh, sugar, gur, onion, vegetables and fruits.
- The fall/rise in index varied from State to State.
Consumer Price Index:
- It measures price changes from the perspective of a retail buyer.
- It is released by the National Statistical Office (NSO).
- It examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
- It is calculated by taking changes in price over time for each item in the predetermined basket of goods and averaging them.
- CPI is adopted as the key measure of retail inflation by the Reserve Bank of India in 2014.
- India uses 2012 as the base year for calculating CPI.
- At present, India has five consumer price indexes (CPIs), three of which are working-class specific. These are:
- CPI for Industrial Workers (IW).
- CPI for Agricultural Labourer (AL).
- CPI for Rural Labourer (RL).
- These three indexes are compiled by the Labour Bureau in the Ministry of Labour and Employment.
- CPIs AL and RL are used to fix minimum wages of agricultural labourers and rural unskilled employees.
- The other two are CPI-Urban and CPI Rural. These two indexes are compiled by the National Statistical Office (NSO) in the Ministry of Statistics and Programme Implementation.
- The combined rise in retail prices is captured by CPI Combined.
- A committee set up by the National Statistical Commission (NSC) in 2005 under the recommendation of Dr C Rangarajan Commission, has suggested that CPI-Rural and CPI-Urban could be a substitute for CPI-AL/RL and CPI-IW, respectively.
Context- Wildlife Trust of India (WTI)’s 2017 report titled Right to Passage highlights the issue of rising conflict around elephant corridors.
- Jharkhand has been a hotspot for elephants in north India. But, in the last decade, the surge of illegal mining has posed new challenges to the free movement of elephants.
- Elephant corridors are narrow strips of land that connect two large habitats of elephants.
- Elephant corridors are crucial to reduce animal fatalities due to accidents and other reasons. So fragmentation of forests makes it all the more important to preserve migratory corridors.
- Elephant corridors have been identified with the help of The Elephant Task Force Report, 2010 “Gajah” and State Forest Departments of elephant range states and till date total no. of 100 elephant corridors have been identified in the country. Many steps have been undertaken by GoI to protect corridors of elephants.
- Around 101 elephant corridors have been identified by the wildlife trust of India under the National elephant Corridor project.
- 20 are in south India,
- 12 in north-western India,
- 20 in central India,
- 14 in northern West Bengal, and
- 22 in north-eastern India.
Threats to Elephant Corridors:
- Habitat loss leading to fragmentation and destruction like construction of buildings, roads, railways, holiday resorts, and fixing solar energized electric fencing, etc.
- Coal mining and iron ore mining is the two “single biggest threats” to elephant corridors in central India.
- There is also a serious poaching problem, as elephant ivory from the tusks is extremely valuable.
- Elephants need extensive grazing grounds and most reserves cannot accommodate them. If protected areas are not large enough, elephants may search for food elsewhere. This often results in conflicts with humans, due to elephants raiding or destroying crops.
- Elephants are keystone species.
- Asian and African Elephants are facing extinction due to illegal poaching for high demand of ivory, tusks & other body parts; as a result these both elephants are also listed in IUCN Red list of Threatened Species as ‘Endangered Asian Elephants’ and ‘Vulnerable African Elephants’
- There are around 28,000 elephants in India with around 25% of them in Karnataka.
- 12 august is celebrated every year as World Elephant day worldwide.
- Elephants have the longest gestation period of any mammal—22 months. Females give birth every four to five years.
- Elephant herds have complex social structures, are led by matriarchs, and are comprised of a group of other adult females and calves, while male elephants tend to live in isolation or small bachelor groups.
- Conservation Status of Indian Elephants:
- Wildlife Protection Act, 1972: Schedule I
- IUCN Red List: Endangered
- CITES: Appendix I
- Project Elephant: It is a centrally sponsored scheme which was launched in 1992 for their protection.
Context- The Regulations Review Authority (RRA 2.0) has recommended withdrawal of additional 100 circulars in the second tranche of recommendations.
Regulations Review Authority (RRA):
- In 1999, the RBI had set up a Regulations Review Authority (RRA) for reviewing the regulations, circulars, reporting systems, based on the feedback from the public, banks, and financial institutions.
- The authority, was set up in April 2021 with an objective to reduce the compliance burden on Regulated Entities (REs).
- It will focus on streamlining regulatory instructions, reducing compliance burden of the regulated entities by simplifying procedures and reducing reporting requirements, wherever possible.
- Regulated entities include commercial banks, urban co-operative banks, Non-Banking Financial Companies.
Reserve Bank of India:
- RBI was established on 1st April, 1935 under the Reserve Bank of India Act, 1934.
- Originally privately owned, since nationalization in 1949, the Reserve Bank is fully owned by the Government of India.
- RBI’s Publications:
- Financial Stability Report.
- Monetary Policy Report.
- Report on Foreign Exchange Reserves.
- Consumer Confidence Survey.
- Inflation Expectations Survey of Households.
Context- Wildfires are predicted to worsen in the coming years and decades, the United Nations Environment Programme (UNEP) has warned in its annual Frontiers report released February 17, 2022.
- Also called bush or vegetation fire or forest fire, it can be described as any uncontrolled and non-prescribed combustion or burning of plants in a natural setting such as a forest, grassland, brush land or tundra, which consumes the natural fuels and spreads based on environmental conditions (e.g., wind, topography).
- Wildfires are a natural phenomenon, but are becoming more dangerous and affecting larger areas. The UN report has attributed this to climate change and human activities.
- The trends towards more dangerous fire-weather conditions are increasing due to rising concentrations of atmospheric greenhouse gases.
- Wildfires seldom spread to humid tropical forests in the past. But these forests are now more vulnerable due to deforestation and forest fragmentation.
- Extreme weather events such as hotter temperatures and more droughts lead to longer fire seasons and increase the likelihood of fire weather condition.
Wildfires in Savannah:
- Wildfires have also become more common in the Savannah ecosystem.
- Savannah or the mixed woodland-grassland ecosystem accounted for 77 per cent of the total 13 million individual fires (lasting for 4-5 days) which occurred globally between 2003 and 2016. This is equivalent to an area around size of the entire European Union.
- This has affected over one-fourth of species in the Savannah ecosystem.
- In 2021 too, Africa was the most affected region due to wildfires, the UNEP report said.
Lightning and pollution:
- Rising forest fires is leading to more frequent incidences of lightning creating a vicious cycle.
- Lightning ignition is the predominant driver of massive wildfires in the boreal forests of North America and northern Siberia.
- Fire-induced thunderstorms are a new danger posed by rising wildfires.
- In recent decades, such thunderstorms have been reported very frequently in Australia, Europe and North America. These thunderstorms contribute to more dangerous conditions for fires on the ground.
- Lightning from these storms will also lead to additional blazes in far-away locations.
- Wildfires are also responsible for air pollution.
Recommendations by UNEP: The report also recommended the following to improve monitoring and management of wildfires:
- Appreciating and adopting indigenous fire management techniques
- Focus on long-range weather forecasting
- Focus on remote-sensing capabilities such as satellites, ground-based radar, lightning detection as well as data handling
Context- An FIR is the document that has been prepared by the police after verifying the facts of the complaint. The FIR may contain details of the crime and the alleged criminal.
First information report (FIR):
- The term first information report (FIR) is not defined in the Indian Penal Code (IPC), Code of Criminal Procedure (CrPC), 1973, or in any other law, but in police regulations or rules, information recorded under Section 154 of CrPC is known as First Information Report (FIR).
- Section 154 (“Information in cognizable cases”) says that “every information relating to the commission of a cognizable offence, if given orally to an officer in charge of a police station, shall be reduced to writing by him or under his direction, and be read over to the informant; and every such information, whether given in writing or reduced to writing as aforesaid, shall be signed by the person giving it, and the substance thereof shall be entered in a book to be kept by such officer in such form as the State Government may prescribe”.
What is a cognizable offence?
- A cognizable offence/case is one in which a police officer may, in accordance with the First Schedule of the CrPC, or under any other law for the time being in force, make an arrest without a warrant.
- In the First Schedule, “the word ‘cognizable’ stands for ‘a police officer may arrest without warrant’; and the word ‘non-cognizable’ stands for ‘a police officer shall not arrest without warrant’.”
What is the difference between a complaint and an FIR?
- The CrPC defines a “complaint” as “any allegation made orally or in writing to a Magistrate, with a view to his taking action under this Code, that some person, whether known or unknown, has committed an offence, but does not include a police report.”
- However, an FIR is the document that has been prepared by the police after verifying the facts of the complaint. The FIR may contain details of the crime and the alleged criminal.
- In case of non-cognizable offences, an FIR under Section 155 CrPC, commonly called “NCR”, is registered.
- No police officer shall investigate a non-cognizable case without the order of a Magistrate having power to try such case or commit the case for trial.”
What is a Zero FIR?
- When a police station receives a complaint regarding an alleged offence that has been committed in the jurisdiction of another police station, it registers an FIR, and then transfers it to the concerned police station for further investigation. This is called a Zero FIR.
What if the police refuse to register an FIR?
- If no FIR is registered, the aggrieved persons can file a complaint under Section 156(3) CrPC before a concerned court which, if satisfied that a cognizable offence is made out from the complaint, will direct the police to register an FIR and conduct an investigation.
Context- The 2021 Notorious Markets List identiﬁed 42 online markets and 35 physical markets that are reported to engage in or facilitate substantial trademark counterfeiting or copyright piracy.
- It includes Indian e-commerce website India Mart and physical markets such as Palika Bazar in New Delhi, Heera Panna in Mumbai, Fancy Market in Kidderpore, Kolkata, and Tank Road in Delhi.
Intellectual Property Rights:
- Intellectual property rights (IPR) are the rights given to persons over the creations of their minds: inventions, literary and artistic works, and symbols, names and images used in commerce.
- They usually give the creator an exclusive right over the use of his/her creation for a certain period of time.
- These rights are outlined in Article 27 of the Universal Declaration of Human Rights, which provides for the right to benefit from the protection of moral and material interests resulting from authorship of scientific, literary or artistic productions.
- The importance of intellectual property was first recognized in
- the Paris Convention for the Protection of Industrial Property (1883) and
- The Berne Convention for the Protection of Literary and Artistic Works (1886).
- Both treaties are administered by the World Intellectual Property Organization (WIPO).
- Intellectual property rights are customarily divided into two main areas:
- Copyright for literary and artistic works such as books and other writings, musical compositions, paintings, sculpture, computer programs and films.
- Industrial property:
- Trademarks and Geographical Indications (GIs).
- Industrial designs and trade secrets.
India and IPR:
- India is a member of the World Trade Organisation and committed to the Agreement on Trade Related Aspects of Intellectual Property (TRIPS Agreement).
- India is also a member of World Intellectual Property Organization, a body responsible for the promotion of the protection of intellectual property rights throughout the world.
- The National Intellectual Property Rights (IPR) Policy 2016 was adopted in May 2016 as a vision document to guide future development of IPRs in the country.