23 December, 2020 - Daily Current Affairs Analysis & MCQs - The Daily News Simplified from The Hindu

  • Centre to set up development finance entity in 3-4 months Economy
  • HC orders composite floor test in BTC Polity
  • Fireflies to shine a light for Great Indian Bustards Env
  • Health data shows India does not need a two-child policy: PCI Social Issues
  • Western Ghats home to 3,387 leopards Env
  • Five years since Paris, an opportunity to build back better Env
  • Question for the day

Prelims Quiz


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    UPSC Current Affairs: Centre to set up development finance entity in 3-4 months |Page 14

    UPSC Syllabus: Mains GS Paper 3: Indian Economy

    Sub Theme: Development Banks in India|UPSC

    In the Last Union Budget 2020-21, the Finance Minister had proposed to set up  Development Finance Institution(DFI), also known as Development Banks for promoting infrastructure funding. The setting up of DFI is set to provide financing for the National Infrastructure Pipeline which proposes to invest around Rs 102 lakh crore in economic and social infrastructure over the next 5 years.

    Recently, the Government has stated that it plans to set up a DFI in the next three to four months with a view to mobilise the finances required for funding of the ambitious national infrastructure pipeline.

    What are Development Finance Institution(DFI) ?

    As the name suggests, these banks are specialised financial institutions that are set up so as to promote the socio-economic development in a country. These Banks provide long term credit at concessional rates to certain critical sectors such as Agricultural, Infrastructure, Industries etc.

    Most of the advanced economies such as USA, UK, Japan etc had set up development banks in the past which enabled them to attain higher growth momentum. On similar lines, China has also set up development banks in the field of agriculture and Trade so as to promote growth and development.

    Some of the development Banks in India include NABARD (Agriculture and Rural Development), Industrial Finance Corporation of India (Industrial Development), SIDBI and MUDRA ( MSME Development), EXIM Bank ( Trade Development), National Housing Bank ( Housing Infrastructure).

    How are the Development Banks different from Commercial Banks?

    Source of Funds: The Commercial Banks are majorly dependant on the depositors' money for extending funds while the development Banks are dependent on the Government's financial support.

    Nature of Loans: The Commercial Banks extend short-term loans while the development Banks extend long-term loans.

    Nature of Role: The role of the commercial banks is confined to the extension of loans while the role of development banks is much more multidimensional.  The Development Banks also offer various kinds of assistance to the companies such as identification of projects for undertaking investment, ensuring that the companies invest in financially viable projects, offering managerial assistance for the execution of projects etc.

    Nature of Assistance provided by the Development Banks

    The Development Banks may offer the following kinds of assistance to the companies:

    • Extend long term finance at concessional rates to the companies.
    • Subscribe/buy the shares of the companies which are involved in financing of infrastructure, industrial or housing projects
    • Partial Credit Guarantee on the repayment of the bonds issued by the companies. This means that if the company issuing the bond defaults on its payment, the Development Bank would repay back a certain amount of money to the investors. This is known as Credit Enhancement. Such kind of guarantee on the repayment of loans reduces the risk enabling the companies to borrow money at lower rates of interest.

    How the setting up of Development Banks benefit Indian Economy?

    Meet Investment Needs: The Government has set a vision to realise $ 5 trillion by the end of 2024-25. In this regard, the Economic Survey 2018-19 has recommended that Indian economy has to shift gears from consumption expenditure to Investment, wherein the private sector investment should become the main engine of growth of Indian Economy. It is also estimated that India would need to spend $4.5 trillion on infrastructure by 2030 to sustain its growth rate. Hence, the setting up of the development Banks would boost the credit creation in the economy leading to higher investment by the private sector.

    Reduce Pressure on Commercial Banks: The Financial System in India is not diversified and it is basically dominated by the Indian Banks. The Banks have mainly relied on short-term deposits for lending to long term infrastructural projects leading to Asset-Liability Mismatch and higher NPAs. The developed economies have diversified financial market consisting of Banks (for meeting short-term credit requirements)  and bond market (for meeting long term credit requirements). The setting up of development Banks would deepen the bond market (through credit enhancement) and reduce pressure on the commercial banks leading to diversified financial market.

    Lower Cost of Capital: As stated before, the credit enhancement provided by the development Banks would enable the companies to raise loans at lower rates of interest leading to decrease in the cost of capital.

    Reduce Foreign Currency Exposures: Presently, some of the Infrastructural and housing finance companies borrow loans from overseas market. The depreciation in the value of Rupee may put additional burden on them and exposure them to fluctuations in the exchange rate. The development banks would enable these companies to raise loans in the domestic market and reduce the foreign currency exposure.


    UPSC Current Affairs: HC Orders Composite Floor Test in BTC |Page 04

    UPSC Syllabus: Prelims – Polity & Governance

    Sub Theme: Composite Floor Test | UPSC

    About Composite Floor Test

    If there is more than a person staking claim to form the government and the majority is not clear, the governor may call for a special session to see who has the majority. Some legislators may be absent or choose not to vote. The majority is then counted based on those present and voting. This can be done through a voice vote, where the legislators respond orally, or through a division vote.

    In case of a division vote, voting can be done using electronic gadgets, slips or in a ballot box. Ballot box is usually a secret voting - just like how people vote during state or parliamentary elections. The person who has the majority will be allowed to form the government. In case there is a tie, the speaker can cast his vote.

    Floor Test :

    Post S. R. Bommai v/s Union of India case, the SC decided to stop the misuse of Article 356. Thus, came into the affect the Floor Test. The Supreme Court decided that the constitutional machinery would be tested on the floor of the Legislative Assembly of the State (by votes) and not as per the whims of the governor. A chief minister appointed by the governor can be asked to prove his majority.


    UPSC Current Affairs: Fireflies’ to shine a light for Great Indian Bustards | Page– 01

    UPSC Syllabus: Prelims: Environment & Biodiversity

    Sub Theme: About Great Indian Bustard| UPSC


    • The great Indian bustard is a bustard found in India and the adjoining regions of Pakistan.
    • A large bird with a horizontal body and long bare legs giving it an ostrich like appearance, this bird is among the heaviest of the flying birds.
    • Once common on the dry plains of the Indian subcontinent, as few as 250 individuals were estimated in 2011 to survive and the species is critically endangered by hunting and loss of its habitat, which consists of large expanses of dry grassland and scrub.
    • These birds are often found associated in the same habitat as blackbuck.


    UPSC Current Affairs: No need of 2 child policy | Page - 10

    UPSC Syllabus: Prelims: Current Affairs

    Sub Theme: Demography in India| UPSC


    National Family Health Survey-5 (NFHS-5) gives evidence of increase in the  usage of modern contraceptives in rural and urban areas thereby leading to a decline in the average number of children borne by a woman. During NFHS 3 and 4 survey, there was a decline in the use of modern methods of contraception.

    Thereby proving that the country’s population is stabilising and fears over a “population explosion” and calls for a “two-child policy” are misguided.

    The analysis of the data shows that the total fertility rate (number of children born per woman) has decreased across 14 of 17 States and is at 2.1 children per woman or less.

    This also implies that most States have attained replacement level fertility

    During NFHS 3 and 4 survey, there was a decline in the use of modern methods of contraception


    UPSC Current Affairs: Western Ghats home to 3,387 leopards | Page - 08

    UPSC Syllabus: Prelims: Environment and Biodiversity

    Sub Theme: Leopards in India| UPSC

    About leopard in India

    • The Indian leopard is a leopard subspecies widely distributed on the Indian subcontinent.
    • It is one of the big cats occurring on the Indian subcontinent, apart from the Asiatic lion, Bengal tiger, snow leopard and clouded leopard.
    • IUCN - Vulnerable as their populations have declined following habitat loss and fragmentation, poaching for the illegal trade of skins and body parts.
    • India has 12,852 leopards as compared to the previous estimate of 7910 conducted 2014.
    • More than 60% increase in population has been recorded.
    • Madhya Pradesh, Karnataka and Maharashtra recorded the highest leopard estimates.
    • No separate census for leopard is conducted. The quadrennial tiger survey also estimates the population of other animals including leopards by relying on camera trap images.


    UPSC Current Affairs: Five years since Paris, an opportunity to build back better | Page - 07

    UPSC Syllabus: Prelims: Environment and Biodiversity

    Sub Theme: Paris Climate Change Deal| UPSC

    Context: Recently a Climate ambition summit 2020 was held with India and EU as participants. It marked the five year anniversary of the Paris Climate deal. In this context the author has highlighted the Progress that has been witnessed in this direction and How India and EU are working towards achievement of the targets of the Paris Climate deal.

    CoP 26

    • The UK will host the 26th UN Climate Change Conference of the Parties (COP26), with its partner Italy in Glasgow on 1-12 November 2021.
    • The COP26 summit will bring parties together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change.
    • The COP26 Presidency will demonstrate the urgency and the opportunities of the journey towards a zero carbon economy and the power of international cooperation to address the gravest challenges the world faces.

    Climate Ambition summit 2020

    • The United Nations, United Kingdom and France co-hosted the Climate Ambition Summit 2020, in partnership with Chile and Italy. This is a monumental step on the road to the UK-hosted COP26 next November in Glasgow.
    • The Summit provided leaders with a global platform to showcase commitments to tackle climate change which were under the three pillars of the Paris Agreement: mitigation, adaptation and finance commitments 

    Initiatives taken so far

    • In December 2019, the European Commission launched the European Green Deal — a new growth model and roadmap to achieve climate neutrality in the EU by 2050.
    • To reach climate neutrality by 2050, EU leaders unanimously agreed on the 2030 target of reducing greenhouse gas emissions by at least 55% compared to 1990 levels.
    • This will further accelerate the fast decrease in the costs of low carbon technologies.
    • The cost of solar photovoltaics has already declined by 82% between 2010 and 2019.
    • Achieving the 55% target will even help us to save €100 billion in the next decade and up to €3 trillion by 2050.

    India and EU Cooperation on Paris deal

    • The EU and India are committed to the full implementation of the Paris Agreement.
    • India has taken a number of very significant flagship initiatives in this respect, such as the International Solar Alliance, the Coalition for Disaster Resilient Infrastructure and the Leadership Group for Industry Transition.
    • India and Team Europe are engaged to make a success of the forthcoming international gatherings: COP 26 in Glasgow on climate change and COP 15 in Kunming on biodiversity.

    Way forward -

    • Five years after the signing of the Paris Agreement, it is more important than ever that the international community comes forward with clear strategies for net-zero emissions and to enhance the global level of ambition for 2030.
    • Together with the delivery of the $100 billion of climate financing to countries most in need, these will be deliverables for the climate negotiations when they resume at COP 26 in Glasgow next November.
    • Team Europe will continue to work closely with India on green investments and the sharing of best practices and technologies.
    • Good public policies are indispensable but not sufficient.
    • We will also need to foster small individual actions to attain a big collective impact.
    • This is the snowball effect we need starting from the Paris Agreement. With climate neutrality as our goal, the world should mobilise its best scientists, business people, policymakers, academics, civil society actors and citizens to protect together something we all share beyond borders and species: our planet.

    SATISH 3 weeks ago

    '"Daily News Simplified - DNS" is one of the best initiative by Rau's IAS among IAS coaching institutes. Please keep it up!

    Anurag Kumar 3 weeks ago

    Q4 - floor test is not mentioned in the constitution, however, it drives its legitimacy from Art 75 which talks about 'collective responsibility'.

    Irengbam Bipinchandra 3 weeks ago

    Is Floor Test mentioned in the constitution of India?
    Please clearify.

    Mrunalsingh Chauhan 2 weeks ago

    Please explain Q4

    1. is Floor test mentioned in the constitution?
    2. Floor Test is w.r.t. State legislature then what is the role of Parliament?