Flash-Cards-for-IAS-Prelims-2018-Revision-Day-59
70 Days WAR Plan

Day#59 Static Flash Cards Revision [70 Days WAR Plan]

Katabatic wind; Merits and demerits of direct tax; Gulf of Riga; FRBM Review Committee; Renukaji Dam Multipurpose Project; Salient features of Mixed economy; World Magnetic Model (WMM); Core Investment Companies (CIC); Isotherms; Isobars; Chit funds;
By IT's Core Team
May 19, 2019

 

 

 

What is Katabatic wind?

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Solution:

  • Katabatic wind, also called downslope wind, or gravity wind, wind that blows down a slope because of gravity.
  • It occurs at night, when the highlands radiate heat and are cooled.

Enrich Your Learning:

Katabatic wind:

  • Katabatic wind, also called downslope wind, or gravity wind, wind that blows down a slope because of gravity.
  • It occurs at night, when the highlands radiate heat and are cooled.
  • The air in contact with these highlands is thus also cooled, and it becomes denser than the air at the same elevation but away from the slope; it therefore begins to flow downhill.
  • This process is most pronounced in calm air because winds mix the air and prevent cold pockets from forming.
  • When a katabatic wind is warmed by compression during its descent into denser air, it is called a foehn.
  • A large-scale katabatic wind that descends too rapidly to warm up is called a fall wind.
  • In areas where fall winds occur, homes and orchards are situated on hillslopes above the lowlands where the cold air accumulates.

 

 

 

Chit Fund schemes are conducted by Organized financial institutions or Unorganized institutions?

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Answer:

Chit Fund schemes can be conducted by organized financial institutions or may be unorganized schemes between friends and/or relatives.

Enrich Your Learning:

Chit funds:

  • A chit fund company is the one which manages, conducts or supervises, as foremen, agent or in any other capacity, chits as defined in Section 2 of the Chit Funds Act, 1982.
  • According to Section 2(b) of the Chit Fund Act, 1982, “Chit means a transaction whether called chit, chit fund, chitty, committee, kuri or by any other name by or under which a person enters into an agreement with a specified of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical installments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount”.
  • Chit Funds can be misused by its promoters and there are many several instances of people sunning such Ponzi schemes and then absconding with investor’s money.

 

 

 

In context of weather map, give brief information on: (i) Isotherms (ii) Isobars.

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Answer & Enrich Your Learning:

Isotherms:

  • The global distribution of temperature can well be understood by studying the temperature distribution in January and July.
  • The temperature distribution is generally shown on the map with the help of isotherms.
  • The Isotherms are lines joining places having equal temperature. Figures given below show the distribution of surface air temperature in the month of January and July.
  • In general, the effect of the latitude on temperature is well pronounced on the map, as the isotherms are generally parallel to the latitude.
  • In the northern hemisphere the land surface area is much larger than in the southern hemisphere. Hence, the effects of land mass and the ocean currents are well pronounced.
  • In January the isotherms deviate to the north over the ocean and to the south over the continent. This can be seen on the North Atlantic Ocean.
  • The presence of warm ocean currents, Gulf Stream and North Atlantic drift, make the Northern Atlantic Ocean warmer and the isotherms bend towards the north.
  • Over the land the temperature decreases sharply and the isotherms bend towards south in Europe.
  • It is much pronounced in the Siberian plain. The mean January temperature along 60° E longitude is minus 20° C both at 80° N and 50° N latitudes.
  • The mean monthly temperature for January is over 27° C, in equatorial oceans over 24° C in the tropics and 2° C – 0° C in the middle latitudes and –18° C to –48° C in the Eurasian continental interior.
  • The effect of the ocean is well pronounced in the southern hemisphere.
  • Here the isotherms are more or less parallel to the latitudes and the variation in temperature is more gradual than in the northern hemisphere.
  • The isotherm of 20° C, 10° C, and 0° C runs parallel to 35° S, 45° S and 60° S latitudes respectively.
  • In July the isotherms generally run parallel to the latitude.
  • The equatorial oceans record warmer temperature, more than 27°C. Over the land more than 30°C is noticed in the subtropical continental region of Asia, along the 30° N latitude.
  • Along the 40° N runs the isotherm of 10° C and along the 40° S the temperature is 10° C.

The distribution of surface air temperature in the month of January:

The distribution of surface air temperature in the month of January

The distribution of surface air temperature in the month of July:

The distribution of surface air temperature in the month of July

Isobars:

  • Small differences in pressure are highly significant in terms of the wind direction and velocity.
  • Horizontal distribution of pressure is studied by drawing isobars at constant levels.
  • Isobars are lines connecting places having equal pressure.
  • In order to eliminate the effect of altitude on pressure, it is measured at any station after being reduced to sea level for purposes of comparison.
  • The sea level pressure distribution is shown on weather maps.
  • Figure given below shows the patterns of isobars corresponding to pressure systems.
  • Low pressure system is enclosed by one or more isobars with the lowest pressure in the centre.
  • High-pressure system is also enclosed by one or more isobars with the highest pressure in the centre.

Isobars, pressure and wind systems in Northern Hemisphere:

Isobars, pressure and wind systems in Northern Hemisphere

 

 

 

In the context of economy, what are the Core Investment companies?

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Answer:

Core Investment companies are companies holding shares, bonds, debentures and is categorized as NBFCs by the RBI. They can’t engage in trading of the instruments they holds.

Enrich Your Learning:

Core Investment Companies (CIC)

  • Core Investment Company (CIC) is a non-banking financial company carrying on the business of acquisition of shares and securities and which
  • holds not less than 90 per cent of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies and
  • its investments in the equity shares in group companies constitutes not less than 60 per cent of its net assets as on the date of the last audited balance sheet.
  • CICs were not required to obtain Certificate of Registration (CoR) from Reserve Bank. Practically, it is very difficult to determine what type of share transaction the CIC is engaging with.
  • Considering the many associate issues, the RBI has enacted a revised regulatory framework for CICs from 2010 onwards.

The salient features of the framework are as follows:

  • Core Investment Companies (CIC) with an asset size of less than Rs100 crore will be exempted from the requirements of registration with RBI. For this purpose all CICs belonging to a Group will be aggregated.
  • CICs with asset size above Rs. 100 crore but not accessing public funds are also exempted from the requirement of registration with RBI.
  • Due to systemic implications on account of access to public funds, CICs having asset size of 100 crore or above are categorised as Systemically Important Core Investment Companies (CICs-ND-SI) and are required to obtain Certificate of Registration from the Reserve Bank.

 

 

 

The world Magnetic model, a large spatial-scale representation of the Earth’s magnetic field was devised by which country/ies?

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Solution:

  • It was produced by the United States’ National Geospatial-Intelligence Agency (NGA) and the United Kingdom’s Defence Geographic Centre (DGC).

Enrich Your Learning:

What is a magnetic field?

  • Earth’s magnetic field, also known as the geomagnetic field, is the magnetic field that extends from the Earth’s interior to where it meets the solar wind, a stream of charged particles emanating from the Sun.
  • Earth’s magnetic field surrounds and protects our planet from the hottest, most statically charged particles emitting from sun towards earth.
  • This magnetic field is governed by molten iron inside earth’s core.

World Magnetic Model:

  • The World Magnetic Model (WMM) is a large spatial-scale representation of the Earth’s magnetic field.
  • It was produced by the United States’ National Geospatial-Intelligence Agency (NGA) and the United Kingdom’s Defence Geographic Centre (DGC).
  • Typically, a new and updated version of the World Magnetic Model (WMM) is released every five years. With the last release in 2015, the next version is scheduled for release at the end of 2019.
  • This Model is the standard model used by the U.S. Department of Defense, the U.K. Ministry of Defence, the North Atlantic Treaty Organization (NATO) and the International Hydrographic Organization (IHO), for navigation, attitude and heading referencing systems using the geomagnetic field.

Uses of World Magnetic Model:

  • The military uses the WMM for undersea and aircraft navigation, parachute deployment, and more.
  • Other governmental organizations, such as NASA, the Federal Aviation Administration, US Forest Service use this technology for surveying and mapping, satellite/antenna tracking, and air traffic management.

Why in news?

  • Recently, a study found that the Earth’s northern magnetic pole is moving quickly away from the Canadian Arctic toward Siberia which forced National Centers for Environmental Information(NCEI’s) scientists (USA) to update the World Magnetic Model mid-cycle.
  • Since 1831, when it was first measured in the Canadian Arctic, the magnetic field has moved about 2300 kilometers toward Siberia. Its speed jumped from about 15 kph to 55 kph since 2000.
  • The reason is turbulence in Earth’s liquid outer core. There is a hot liquid ocean of iron and nickel in the planet’s core where the motion generates an electric field.

 

 

 

What are the salient features of Mixed economy?

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Answer & Enrich Your Learning:

Salient features of Mixed economy

  • Co-existence of Private and Public Sector: Under this system there is co-existence of public and private sectors. In public sector, industries like defence, power, energy, basic industries etc., are set up. On the other hand, in private sector all the consumer goods industries, agriculture, small-scale industries are developed. The government encourages both the sectors to develop simultaneously.
  • Personal Freedom: Under mixed economy, there is full freedom of choice of occupation, although consumer does not get complete liberty but at the same time government can regulate prices in public interest through public distribution system.
  • Private Property is allowed: In mixed economy, private property is allowed. However, here it must be remembered that there must be equal distribution of wealth and income. It must be ensured that the profit and property may not concentrate in a few pockets.
  • Economic Planning: In a mixed economy, government always tries to promote economic development of the country. For this purpose, economic planning is adopted. Thus, economic planning is very essential under this system.
  • Price Mechanism and Controlled Price: Under this system, price mechanism and regulated price operate simultaneously. In consumer goods industries price mechanism is generally followed. However, at the time of big shortages or during national emergencies prices are controlled and public distribution system has to be made effective.
  • Profit Motive and Social Welfare: In mixed economy system, there are both profit motive like capitalism and social welfare as in socialist economy.
  • Check on Economic Inequalities: In this system, government takes several measures to reduce the gap between rich and poor through progressive taxation on income and wealth. The subsidies are given to the poor people and also job opportunities are provided to them. Other steps like concessions, old age pension, free medical facilities and free education are also taken to improve the standard of poor people. Hence, all these help to reduce economic inequalities.
  • Control of Monopoly Power: Under this system, government takes huge initiatives to control monopoly practices among the private entrepreneurs through effective legislative measures. Besides, government can also fake over these services in the public interest.

 

 

 

Which six states have signed an agreement for Renukaji Dam Multipurpose Project?

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Answer:

Uttar Pradesh, Haryana, Himachal Pradesh, Delhi, Rajasthan and Uttarakhand.

Enrich Your Learning:

Renukaji Dam Multipurpose Project:

  • An agreement for Renukaji Dam Multipurpose Project signed among six states- Uttar Pradesh, Haryana, Himachal Pradesh, Delhi, Rajasthan and Uttarakhand.
  • Three storage projects are proposed to be constructed on the river Yamuna and two of its tributaries – Tons and Giri in the hilly regions of Uttarakhand and Himachal Pradesh of Upper Yamuna Basin.
  • These include Lakhwar project on river Yamuna in Uttarakhand, Kishau on river Tons in Uttarakhand and Himachal Pradesh and Renukaji on river Giri in Himachal Pradesh.
  • These three projects were identified as National Projects in 2008 under which 90% funding of the cost of irrigation & drinking water component will be provided by the Govt. of India as central assistance and the rest 10% cost of the irrigation and drinking water component will be borne by the beneficiary states.
  • Renukaji Dam project has been conceived as a storage project on Giri River (tributary of river Yamuna) in Sirmour District of Himachal Pradesh. The project envisages construction of 148 M high rock filled dam for supply of 23 cumec water to Delhi and other basin states.
  • The project will also generate 40 MW of power during peak flow. The project is proposed to be executed by Himachal Pradesh Power Corporation Ltd. (HPPCL).
  • After the construction of the said dam, the flow of river Giri will increase about 110% which will meet the drinking water needs of Delhi & other basin states up to some extent in lean period.
  • Stored water of Renukaji Dam will be used by UP, Haryana & NCT of Delhi from Hathnikund Barrage, by NCT of Delhi from Wazirabad Barrage and by UP, Haryana and Rajasthan from Okhla Barrage.

 

 

 

The FRBM Review Committee was headed by?

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Answer:

The FRBM Review Committee headed by former Revenue Secretary, N.K. Singh was appointed by the government to review the implementation of FRBM.

Enrich Your Learning:

FRBM Review Committee:

  • The Committee suggested that a rule based fiscal policy by limiting government debt, fiscal deficit and revenue deficits to certain targets is good for fiscal consolidation in India.

Following are the main recommendations of the NK Singh Committee:

  • Public debt to GDP ratio should be considered as a medium-term anchor for fiscal policy in India.The combined debt-to-GDP ratio of the centre and states should be brought down to 60 per cent by 2023 as against the existing 49.4 per cent, and 21 per cent respectively.
  • Fiscal deficit as the operating target:The Committee advocated fiscal deficit as the operating target to bring down public debt. For fiscal consolidation, the centre should reduce its fiscal deficit from the current 3.5% (2017) to 2.5% by 2023.
  • Revenue deficit target: The Committee also recommends that the central government should reduce its revenue deficit steadily by 0.25 percentage (of GDP) points each year, to reach 0.8% by 2023, from a projected value of 2.3% in 2017.
  • Formation of Fiscal Council to advice the government. The Committee advocated formation of institutions to ensure fiscal prudence in accordance with the FRBM spirit. It recommended setting up an independent Fiscal Council. The Council will provide several advisory functions. It will forecast key macro variables like real and nominal GDP growth, tax buoyancy, commodity prices. Similarly, it will do a monitoring role, besides advising about the use of escape clause and also specify a path of return.
  • Escape Clause to accommodate counter cyclical issues: The NK Singh Committee points out that there are disadvantages with set fiscal deficit target if some economic instabilities like an external crisis affects the Indian economy. Hence, the committee advocates countercyclical covers in fiscal policy while following the FRBM. Here, the committee recommends fiscal flexibilities to go above or below the fiscal deficit targets in the form of ‘escape clauses’. The Committee set 0.5% as escape clause for fiscal deficit target.
  • Buoyancy: What the government has to do with fiscal deficit target when higher economic growth occurs? The Committee also advocates that that the policy responses to sharp changes in output growth should be symmetric (to that of the escape clause). This implies that during higher economic growth, fiscal deficit should be reduced accordingly.
  • Fiscal consolidation responsibility for states: The Committee observes that state government’s fiscal position is important after greater resource transfer to them (Fourteenth finance Commission award). Now, total state expenditures (as a percent of GSDP) is now even greater than the Centre. Hence, fiscal consolidation should also be made by the states. They should bring down their debt target to 20% of GDP from the current 21%.
  • Congruence of Fiscal and Monetary Policy: The FRBM Review Commitee observed that both monetary and fiscal policies must ensure growth and macroeconomic stability in a complementary mannger. For this, the Inflation Targeting (IT) regime and Fiscal Rules (FRs) have to interact with each other.

 

 

 

The Gulf of Riga is connected to the Baltic sea via which strait?

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Solution:

  • Irbe Strait

Enrich Your Learning:

Gulf of Riga:

  • The Gulf of Riga, Bay of Riga, or Gulf of Livonia is a bay of the Baltic Sea between Latvia and Estonia.
  • The island of Saaremaa (Estonia) partially separates it from the rest of the Baltic Sea.
  • The main connection between the gulf and the Baltic Sea is the Irbe Strait.
  • The Gulf of Riga, as a sub-basin of the Baltic, also includes the Väinameri Sea in the West Estonian archipelago.
  • Major islands in the gulf include Saaremaa, Kihnu and Ruhnu, which are all controlled by Estonia.
  • The main rivers flowing into the gulf are Daugava, Pärnu, Lielupe, Gauja, and Salaca.
  • The gulf is separated from the Baltic Sea proper by Estonia’s Muhu archipelago, but navigation is possible through several straits.
  • The gulf, icebound from December until April, has a maximum depth of 177 ft.
  • There are several ports and resorts on the shores of the gulf, particularly Riga itself.

Gulf of Riga

 

 

 

What are the merits and demerits of direct tax?

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Answer & Enrich Your Learning:

Merits and demerits of direct tax:

Direct taxes are levied on a person’s or a firm’s income or wealth and indirect taxes on spending on goods and services.

Direct taxes cannot be legally evaded but in direct taxes can be avoided because people can reduce their purchases of the taxed goods and services.

Advantages:

  • Equity: A direct tax is an equitable tax. Through it the rich can be made to pay more than the poor. In case of necessity, the poor people can be granted exemption from payment of such taxes.
  • Certainty: A direct tax satisfies the canon of certainty. For instance, a person liable to pay income tax knows how much he will be required to pay; for that purpose he can appropriate steps beforehand.
  • Elasticity: A direct tax has elasticity. It can be varied according to the needs of the government and changes in the income of the people. When the income of the people goes up, the rate of income tax can also be increased. If the income of the people falls, the rate of income tax can also be lowered.
  • Productivity: Direct taxes constitute an important source of government revenue. Their collection charges are also low. There­fore, direct taxes are productive.
  • People’s Consciousness: A direct tax increases the civic sense of the people. When the people are fully aware of the payment of taxes, they are also conscious of the way the government spends the money. They resent unproductive or wasteful expenditure. As a result, the government becomes careful in its expenditure.

Demerits:

  • Lack of Popularity: Such taxes are not very popular, because the people have to bear the burden of such taxes directly. That is why, when the rate of a direct tax is raised, most people express their resentment against the government. For instance, when the rate of personal income tax or corporate profit tax is raised, criticism from those affected be­comes very strong.
  • Evasion: It is liable to be evaded. By submitting false returns, many people try to evade income tax. Unless the civic sense of the people is well — developed and there is spread of education among them, the admi­nistration of direct taxes is very difficult.
  • People’s Indifference: It does not develop the civic sense of those who do not pay such taxes. In the case of income tax, people with incomes below a certain level are not liable to pay tax. In a low-income country like India, the majority of the people are not required to pay income tax. When a man directly bears the burden of a tax, he tries to know how the government spends that money. Those who are not directly affected by the burden of taxation remain indifferent as to the way the public expenditure is incurred.
  • Disincentive to Work and Save: They reduce the desire to work and save. The rate of direct taxes are usually high. Many business ventures are not undertaken on the ground that a large part of the income earned will have to be given to the government in the form of taxes. Thus, direct taxes reduce incen­tives to work hard and save.
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