DAILY CURRENT AFFAIRS IAS | UPSC Prelims and Mains Exam –20th May 2024

Syllabus

• Prelims – Economy

Context: A frenzied growth in India’s equity options market, which clocked a record 85 billion trades last year and accounted for 84 percent of all equity option contracts traded in 2023, is unnerving policymakers and regulators.

Background:-

• Retail investors now make up over 35 percent of options trades, undeterred by the fact that 9 out of 10 individual traders in the equity futures and options (F&O) segment are recorded to have incurred losses.

About FUTURES & OPTIONS TRADING

• Futures and options are two types of financial derivatives that derive their value from an underlying asset such as shares, stock market indices, commodities, ETFs, and more.

Futures

• Futures are contracts that obligate the buyer to purchase a specific asset, and the seller to sell and deliver that asset, at a specific future date. They are typically used to hedge against risk or for speculation.

Key Features:

• Standardization: Futures contracts are standardized in terms of contract size, expiration date, and other details, facilitating easy trading on exchanges.
• Obligation: Both parties in a futures contract are obligated to fulfill the contract at expiration. This means the buyer must purchase, and the seller must sell the asset at the agreed-upon price.
• Margin Requirements: Traders must maintain a margin account, which requires an initial margin (a percentage of the contract’s value) and maintenance margin (minimum balance to keep the position open).

Options

• Options, on the other hand, give the buyer (of an options) the right, but not the obligation, to buy (or sell) an asset at a specific price at any time during the life of the contract. They are often used for hedging, speculation, or arbitrage.

Key Features:

• Types: There are two types of options: call and put. A call option confers the right to buy a stock at the strike price before the agreement expires. A put option gives the holder the right to sell a stock at a specific price.
• Right, Not Obligation: The buyer has the right but is not obligated to exercise the option.The seller, however, has the obligation to fulfill the contract if the buyer exercises the option.
• Premium: The buyer of an option pays a premium to the seller for this right. The premium is the price of the option.
• Strike Price: This is the price at which the option holder can buy (call) or sell (put) the underlying asset.
• Expiration Date: Options have a finite life and must be exercised on or before their expiration date.

Here are some key differences between futures and options:

• Obligation: A futures contract requires a buyer to purchase the underlying security or commodity—and a seller to sell it—on a specific future date, unless the holder’s position is closed earlier. An options contract, however, gives an investor the right, but not the obligation, to buy (or sell) shares at a specified price at any time before the contract’s expiration.
• Risk: Futures contracts carry a high level of risk because they require the holder to buy or sell the asset in the future, regardless of its current market price. Options contracts, on the other hand, limit potential loss to the cost of the option premium.
• Cost:Futures require margin and can involve significant capital commitment.Options require the payment of a premium, which is generally lower than the margin for futures.

Source: Indian Express

Syllabus

• Prelims – Environment

Context: As forest fires rage through Uttarakhand, the chir pine with its inflammable leaves or needles has been in the news for less benign reasons.

Background:

• After a government ban in 1981 on felling of trees over 1,000 mt above sea level, the chir got an opportunity to spread lower in the foothills where the sal grows and above too, among the broad-leaved trees because it’s the nature of the chir to colonise.

About CHIR PINE

• A conifer that can grow up to a height of about 30 metres, the chir pine covers almost 16.5 per cent of Uttarakhand’s total forested area.
• It owes its scientific name, Pinus roxburghii, to William Roxburgh, a Scottish doctor and naturalist, who went on to become superintendent of the East India Company’s botanic garden at Calcutta and who is widely regarded as the father of Indian botany.
• Native to the Himalayas, chir pine or the longleaf Indian pine, was not introduced to the Himalayas by the British, as is often believed, though they certainly gave it preference for its commercial use, mainly lumber and resin.
• Found all over the Western Himalayas at an elevation between 1,000 and 2,000 metres, it covers large parts of Garhwal and Kumaon where it can be seen growing on steep slopes and can be identified by its three needles and its round cone (unlike the elongated cones of other pines).
• Chir Pine does not allow any vegetation to grow around it as it makes the soil more acidic through its fallen needles. The accumulating carpet of needles on the forest floor under these trees makes conditions unfavourable for many common plants and trees to grow
• A few years ago, the Uttarakhand government had considered cutting pine trees to combat forest fires, an idea it later abandoned.
• For the short-term and long-term management of the forests in Uttarakhand, the dense chir pine forest, more like monocultures, must be converted into mixed forests. More broad-leaf species should be promoted and the dense chir pine forests should be effectively managed and their wood used. The state could effectively manage the chir forests and earn some revenue as well.
• The needles of chir falling onto the forest floor both suppressed the grass and rendered the hillside dangerous for cattle. Thus, in late April or early May, villagers resorted to the time-honoured remedy of fire to obtain a fresh crop of grass. Steps taken by the British to stop this practice often sparked popular protests.
• While its needles tend to catch fire easily because of their high resin content, the bark of the tree doesn’t catch fire easily since it has a very high ignition temperature — which is why blacksmiths use the bark of the chir pine in their furnaces to melt metal.
• The tree is perennial but its needles shed maximum between fall and spring. The dry spell is also during this time. The needles should be removed in November-December as was done traditionally to stop spread of forest fires.

Source: Indian Express

Syllabus

• Prelims – Geography

Context: The government on Saturday urged Indian citizens in Kyrgyzstan to stay indoors amid reports of attacks on foreign students and protests by local residents in Bishkek on Friday night over concerns about “growing numbers of migrants from Pakistan, Bangladesh, India, Egypt and other countries”.

Background:

• Around 15,000 Indian students are estimated to be in Kyrgyzstan, mostly enrolled in medical colleges and universities.

About KYRGYZSTAN :

• Kyrgyzstan, officially the Kyrgyz Republic, is a landlocked country in Central Asia, lying in the Tian Shan and Pamir mountain ranges.
• Bishkek is the capital and largest city of the country.
• Kyrgyzstan is bordered by Kazakhstan to the north, Uzbekistan to the west, Tajikistan to the south, and China to the east and southeast.
• Ethnic Kyrgyz make up the majority of the country’s 7 million people, followed by significant minorities of Uzbeks and Russians.
• On 31 August 1991, Kyrgyzstan declared independence from the USSR and a democratic government was established. Kyrgyzstan attained sovereignty as a nation state after the breakup of the Soviet Union in 1991.
• After independence, Kyrgyzstan was officially a unitary presidential republic; after the Tulip Revolution it became a unitary parliamentary republic, although it gradually developed an executive president and was governed as a semi-presidential republic before reverting to a presidential system in 2021.
• Kyrgyzstan is a member of the Commonwealth of Independent States, the Eurasian Economic Union, the Collective Security Treaty Organization, the Shanghai Cooperation Organisation, the Organisation of Islamic Cooperation, the Organization for Security and Cooperation in Europe, the Organisation of Turkic States, and the United Nations.
• It is a developing country and is the second poorest country in Central Asia after neighbouring Tajikistan.
• The country’s transitional economy is heavily dependent on deposits of gold, coal and uranium

Source: Indian Express

Syllabus

• Prelims – Current Event

Context: In the last 10 years, Lok Sabha members elected from Delhi’s seven constituencies have not utilised Rs 100 crore from their entitled Rs 311.5 crore funds under the Members of Parliament Local Area Development (MPLAD) scheme.

Background:

• In the 17th Lok Sabha, elected in 2019, the entitlement was Rs 124 crore out of which the MPs managed to get only Rs 45.5 crore while Rs 78.5 crore remained unreleased.

ABOUT MPLAD scheme. :

• The Members of Parliament Local Area Development Scheme (MPLADS) is a scheme formulated by the Government of India on December 23, 1993.
• This scheme enables the members of parliaments (MP) to recommend developmental work in their constituencies with an emphasis on creating durable community assets based on locally felt needs.
• The MPLADS is a Plan Scheme fully funded by Government of India.
• The Ministry of Statistics and Programme Implementation has been responsible for the policy formulation, release of funds and prescribing monitoring mechanism for implementation of the Scheme.
• Under the MPLADS, each MP has the choice to suggest to the District Collector for works to the tune of Rs.5 Crores per annum to be taken up in his/her constituency.
• The Rajya Sabha Members of Parliament can recommend works in one or more districts in the State from where he/she has been elected.
• The Nominated Members of the Lok Sabha and Rajya Sabha may select any one or more Districts from any one State in the Country for implementation of their choice of work under the scheme.
• The scheme primarily focuses on the creation of durable community assets in the areas of drinking water, primary education, public health, sanitation, and roads.
• The process under MPLADS starts with the Members of Parliament recommending works to the Nodal District Authority. The Nodal District concerned is responsible for implementing the eligible works recommended by the Members of Parliament and maintaining the details of individual works executed and amount spent under the Scheme.

Source: Indian Express

Syllabus

• Prelims – Current Event

Context: In the last 10 years, Lok Sabha members elected from Delhi’s seven constituencies have not utilised Rs 100 crore from their entitled Rs 311.5 crore funds under the Members of Parliament Local Area Development (MPLAD) scheme.

Background:

• In the 17th Lok Sabha, elected in 2019, the entitlement was Rs 124 crore out of which the MPs managed to get only Rs 45.5 crore while Rs 78.5 crore remained unreleased.

ABOUT MPLAD scheme. :

• The Members of Parliament Local Area Development Scheme (MPLADS) is a scheme formulated by the Government of India on December 23, 1993.
• This scheme enables the members of parliaments (MP) to recommend developmental work in their constituencies with an emphasis on creating durable community assets based on locally felt needs.
• The MPLADS is a Plan Scheme fully funded by Government of India.
• The Ministry of Statistics and Programme Implementation has been responsible for the policy formulation, release of funds and prescribing monitoring mechanism for implementation of the Scheme.
• Under the MPLADS, each MP has the choice to suggest to the District Collector for works to the tune of Rs.5 Crores per annum to be taken up in his/her constituency.
• The Rajya Sabha Members of Parliament can recommend works in one or more districts in the State from where he/she has been elected.
• The Nominated Members of the Lok Sabha and Rajya Sabha may select any one or more Districts from any one State in the Country for implementation of their choice of work under the scheme.
• The scheme primarily focuses on the creation of durable community assets in the areas of drinking water, primary education, public health, sanitation, and roads.
• The process under MPLADS starts with the Members of Parliament recommending works to the Nodal District Authority. The Nodal District concerned is responsible for implementing the eligible works recommended by the Members of Parliament and maintaining the details of individual works executed and amount spent under the Scheme.

Source: Indian Express

Syllabus

• Prelims – Polity

Context:  Congress leader Rahul Gandhi is contesting in 2 seats. One in Up and other in Kerala. According to the Representation of the People Act (RPA), 1951, a candidate is permitted to contest an election from up to two constituencies, but he or she can hold only one seat at a time if elected from both.

Background:

• Opposition to a candidate contesting from many seats was basically due to the fact that many byelections had to be conducted after polls were over.

Rules on contesting elections:

• A sub-section, 33 (7), of the RPA, allowing a candidate to contest from two seats, was introduced through an amendment in 1996, prior to which there was no bar on the number of constituencies from which a candidate could contest.
• However, Section 70 of the same Act stipulates that a candidate can hold only one seat at a time, regardless of whether he or she has been elected from more than one seat. Thus, if a candidate wins from two seats, a byelection is necessary from the seat he or she vacates.

Additional Information

• The minimum age for a person to contest Lok Sabha and Assembly polls is 25 years, while one can become a member of the Rajya Sabha or the State Legislative Council only at 30 years.
• There is no minimum educational qualification needed to contest general elections in India. Candidates must be citizens of India, registered in some constituency of the country as a valid voter.

How can a candidate be disqualified?

• A person shall be disqualified from being chosen as or being a member of either House if he holds any office of profit under the Government of India or the Government of any State; if he or she is of unsound mind and stands so declared by a competent court; if he or she is an undischarged insolvent; if he or she is not a citizen of India or has voluntarily acquired the citizenship of a foreign state.
• Under the RPA Act, if a person is convicted of any offence and sentenced to an imprisonment of two years or more, this will lead to his disqualification to contest elections.
• Even if this person is out on bail, after the conviction and his appeal is pending for disposal, he or she is disqualified from contesting an election.
• For some categories of serious offences, one may incur disqualification for any conviction, regardless of the quantum of punishment.

Source: Hindu

Syllabus

• Mains – GS 3

Context: The UN Financing for Sustainable Development Report 2024 released by the United Nations (UN) stated that more investment is needed if the 17 Sustainable Development Goals (SDGs), agreed upon by all United Nations members back in 2015, are to be achieved by 2030.

Background:

• With only six years remaining to achieve the SDGs, hard-won development gains are being reversed, particularly in the poorest countries. If current trends continue, the UN estimates that almost 600 million people will continue to live in extreme poverty in 2030 and beyond, more than half of them women.

Key Highlights of the UN Financing for Sustainable Development Report 2024:

• Rising geopolitical tensions, climate disasters, and a global cost-of-living crisis have hit billions of people globally, which has halted the progress on healthcare, education, and other development targets.
• Debt services in the Least developed countries (LDC) will increase from USD 26 billion annually in 2022 to USD 40 billion annually between 2023 and 2025. Stronger and more frequent disasters, caused by the ongoing climate crisis, account for more than half of the debt upsurge in vulnerable countries.
• The poorest countries now spend 12% of their revenues on interest payments, 4 times more than they spent a decade ago. Roughly 40% of the global population lives in countries where governments spend more on interest payments than on education or health.
• In least-developed countries, development funding is slowing down. Due to several reasons such as low domestic revenue growth due to tax evasion and avoidance, a falling rate of corporate tax (which was 28.2% in 2000 to 21.1% in 2023), due to globalisation and tax competition, etc.
• According to the Financing for Sustainable Development Report: Financing for Development at a Crossroads Report 2024, around USD 4.2 trillion in investments is needed to close the development financing gap. This number was USD 2.5 trillion before the Covid-19 pandemic began.

Suggestions made by the UN Financing for Sustainable Development Report 2024:

• The international financial system, which was set up at the 1944 Bretton Woods Conference, is no longer fit for purpose. A massive surge of financing and a reform of the international financial architecture can help to achieve SDG goals by 2030.
• To achieve the SDGs global cooperation, targeted financing, and, crucially, the political will is the need of the hour.

Progress made by India in Achieving SDGs:

• India ranks 112th out of 166 countries (from 121st in 2022) in terms of progress towards the Sustainable Development Goals (SDGs) in the United Nations SDG Index and Dashboards Report 2023.
• India has successfully lifted millions of people out of poverty, reducing the poverty rate from 45% in 1993 to around 21% in 2011. Around 415 million people exited poverty within just 15 years between 2005 and 2021 in India, according to the latest Global Multidimensional Poverty Index (MPI) 2023
• The prevalence of undernourishment in India has decreased from 18.2% in 2004-2006 to 14.5% in 2016-2018. However, India is still home to a quarter of all undernourished people worldwide, making the country a key focus for tackling hunger on a global scale.
• India has made significant improvements in maternal and child health, with a reduction in maternal mortality ratio from  384 in 2000 to 103 in 2020 (UN MMEIG 2020 report). The under-five mortality rate has also declined from 89 per 1,000 live births in 1990 to 34 in 2019.
• According to the Education Ministry, the literacy rate in rural India stands at 67.77%, while in urban India, it is 84.11% The ASER 2023 data shows that in the surveyed rural districts, more than 85% of youth (age 14-18) are currently enrolled in some kind of educational institution.
• The female labour force participation rate in India increased from 23.3% in 2017-18 to 37.0% in 2022-23 (PLFS-5).

Source: UN

Q1.) Consider the following statements about Futures and Options

1. Futures and options derive their value from an underlying asset.
2. Futures contracts carry a high level of risk compared to options.
3. Both parties in a futures contract are obligated to fulfill the contract at expiration.

How many of the statements given above are correct?

1. Only one
2. Only two
3. All three
4. None

Q2.) Consider the following statements about Chir Pine:

1. It was  introduced to the Himalayas by the British for commercial purpose.
2. Chir Pine does not allow vegetation to grow around it as it makes the soil more acidic through its fallen needles.
3. It is valuable due to its timber wood as they are largely used for various purposes such as constructing houses, making furniture and even musical instruments.

How many of the statements given above are correct?

1. Only one
2. Only two
3. All three
4. None

Q3.) Consider the following countries

1. Liechtenstein
2. Uzbekistan
3. Kyrgyzstan
4. Ethiopia

Which among the above countries are “doubly landlocked”:

1. 1 only
2. 2 and 3
3. 1 and 2
4. 3 and 4

Comment the answers to the above questions in the comment section below!!

ANSWERS FOR ’  20th May 2024 – Daily Practice MCQs’ will be updated along with tomorrow’s Daily Current Affairs.st

Q.1) – c

Q.2) – d

Q.3) – d