Ans: A

Exp:

Recently, the Draft rules were released, 16 months after the DPDP Act, 2023 was notified.

• Aim: To operationalize the DPDP Act, 2023.
• Current Status: Government soliciting feedback through a fiduciary framework that precludes public disclosure and counter-comments.

Background:

• 2011 → Justice AP Shah Committee recommended privacy legislation
• 2017 → Supreme Court in Justice KS Puttaswamy (Retd) vs Union of India recognized privacy as a fundamental right →  Justice BN Srikrishna Committee was formed to draft data protection laws.
• 2023 → DPDP Act is enacted to ensure data protection through rights-based governance
• Scope → Covers digital personal data processing in India where such data is collected online or offline and is digitised.

Key Provisions of the DPDP Act, 2023:

• Data Principal Rights → Individuals (Referred to as ‘Data Principals’) are granted rights to access, correct, and erase their personal data.
  • They can also nominate representatives to exercise these rights on their behalf.
• Exemptions → Government agencies can be exempted in the interest of specified grounds such as security of the state, public order, and prevention of offences.
  • Statement 1 is Correct: The Act permits cross-border transfer of personal data to countries specified by the Central Government, ensuring compliance with India’s data protection requirements.
• Data Protection Board of India → Act establishes this board to oversee compliance, address grievances, and impose penalties for violations → DPB has civil court powers for personal data breach complaints. 
• Board members → Appointed for two years and will be eligible for re-appointment.   
  • The central government will prescribe details such as the number of members of the Board and the selection process.  
  • Statement 2 is Correct: Significant data fiduciaries must appoint a Data Protection Officer and ensure periodic data audits.
• Data Localization → Certain categories of data are required to be stored within India, ensuring data sovereignty and security.
  • The specifics of these categories are determined by the government.
• Data Fiduciary Obligations → Entities handling personal data, termed ‘Data Fiduciaries,’ are mandated to process data transparently, ensuring accuracy and security.
• User (Data principals) Consent → Personal data may be processed after obtaining the consent of the individual
  • Consent will not be required for ‘legitimate uses’ like if data has been provided voluntarily,  provision of benefit or service by the government, medical emergency, etc.
• Establishment of Data Protection Officer (DPO) → Central Government may notify any Data Fiduciary or class of Data Fiduciaries as Significant Data Fiduciary.
  • Significant Data Fiduciary shall appoint a DPO who shall reside in India and be the point of contact for the grievance redressal mechanism. 
• Processing of personal data of children or a person with disability → Verifiable consent of parent or the lawful guardian is mandatory.

• Statement 3 is Incorrect: The Act prescribes monetary penalties but does not include criminal penalties.

Ans: A

Exp:

The Reserve Bank of India (RBI) has introduced revised norms for Asset Reconstruction Companies (ARCs) to streamline the settlement of dues with borrowers.

Key Features of the Guidelines:

• Differentiated Approach Based on Loan Size:
• For dues above ₹1 crore → Approval requires recommendations by an Independent Advisory Committee (IAC) → Comprising experts in technical, financial, or legal domains.
• Board of Directors (including at least two independent directors) → Must deliberate on IAC’s recommendations and evaluate alternative recovery options.
• For dues up to ₹1 crore → Settlement proposals can be approved by officials not involved in acquiring the concerned financial asset to avoid conflicts of interest.
  • Officials involved in acquiring the financial asset cannot participate in the approval of settlement to prevent conflicts of interest.
• Recovery Safeguards → Settlements must ensure the Net Present Value (NPV) of the settlement is not less than the realisable value of securities.
• Settlements involving borrowers classified as wilful defaulters or frauds will follow the same stringent procedures applicable to high-value accounts, irrespective of the settlement amount. 

About Asset Reconstruction Company (ARC):

• Financial institution that buys the NPA or bad assets from banks and financial institutions at a mutually agreed value so that the latter can clean up their balance sheets.
• Registration → Registered as a company by RBI under the SARFAESI Act, 2002.
• Regulated by Reserve Bank of India (RBI) → Under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.
• Examples → National Asset Reconstruction Company Limited (NARCL), India Debt Resolution Company Ltd etc.
• Required funds to purchase such debts → Can ONLY be raised from Qualified Buyers → ARCs are prohibited from raising money by way of deposit.
• Qualified Buyers include Financial Institutions, Insurance companies, Banks, State Financial Corporations, State Industrial Development Corporations, trustee or ARCs registered under SARFAESI and Asset Management Companies registered under SEBI that invest on behalf of mutual funds, pension funds, FIIs, etc.
• To commence the business of securitisation or asset reconstruction → ARC is required to have a minimum net owned fund (NOF) of Rs 300 crore and thereafter, on an ongoing basis.
• They are also mandated to maintain a capital adequacy ratio of a minimum of 15% of its total risk-weighted assets.
• Statement 1 is Correct: ARCs raise funds by issuing Security Receipts (SRs)
  • ARCs purchase Non-Performing Assets (NPAs) from banks and financial institutions.
  • To finance these purchases, ARCs issue Security Receipts (SRs) to Qualified Buyers (QBs), such as banks, financial institutions, and mutual funds.
  • These SRs are tied to the recovery performance of the acquired assets.
  • Objective: To provide liquidity to banks while focusing on recovering or restructuring bad loans.
• Statement 2 is Incorrect: Security receipts are guaranteed by the Government of India
  • SRs issued by ARCs are not guaranteed by the Government of India.
  • Their value depends on the realization of the underlying assets, which means the returns are subject to the recovery process’s success.
• Implication: SRs carry a level of risk since they are not backed by a sovereign guarantee.
• Statement 3 is Correct: ARCs act as both asset acquirers and asset managers
  • Asset Acquirers: ARCs acquire NPAs from banks at a discounted price, helping banks clean their balance sheets.
  • Asset Managers: After acquiring the NPAs, ARCs work to recover, restructure, or liquidate the underlying assets to maximize returns.
  • Objective: To recover or optimize the value of stressed assets for financial stability and economic efficiency.

Process:

• Acquisition of Bad Loans → ARCs purchase NPAs from banks and financial institutions at a discounted price, allowing lenders to clean up their balance sheets.
• Resolution of Stressed Assets → After acquiring bad loans, ARCs use various strategies such as restructuring, one-time settlements, or asset liquidation to recover dues.
• Securitization of Loans → ARCs may issue securities or bonds to investors, backed by the underlying bad loans, to raise funds for further asset acquisitions

Business Model:

• Acquisition of Stressed Loans → Lenders sell stressed loans to ARCs at a discount, freeing up their resources to focus on fresh loans.
• Security Receipts → ARCs issue security receipts to lenders, redeemable upon recovery of the specific loan.
• They also charge a management fee of 1.5% to 2% of the asset value annually and earn from recoveries, sharing upside with the selling financial institutions.

Ans: B

Exp:

Recently, the US President Donald Trump declared that a global corporate minimum tax deal “has no force or effect” in the U.S., effectively pulling America out of the landmark 2021 arrangement negotiated by the Biden administration with nearly 140 countries.

• Statement 1 is Correct: The OECD, along with the G20, spearheads the Global Minimum Tax initiative as part of the Base Erosion and Profit Shifting (BEPS) framework

  • Background: The Organization for Economic Cooperation and Development (OECD) developed the BEPS framework to address tax challenges arising from digitalization and globalization.
  • Global Minimum Tax (GMT) is a critical part of this framework, aimed at ensuring a fairer global tax system.
• Agreement established a two-pillar solution:
  • Pillar One → Which calls for the redistribution of profits generated by the largest companies to the domicile markets where they actually make their sales instead of simply where they are headquartered.
  • A quarter of any profits they make above the 10% threshold will be reallocated to the countries where they were earned and taxed there.
  • Pillar Two →  Provides for a global minimum tax for “Multinational Enterprises” (MNEs) → Aims to deter profit shifting by ensuring that these firms maintain a minimum Effective Tax Rate (ETR) of 15% across all jurisdictions in which they operate.
  • MNEs → As per the rules, are defined as those entities with a global turnover exceeding 750 million euros
  • Governments will be equipped to impose additional taxes in case companies are found to be paying taxes that are considered too low.
  • Role of G20: The G20 supports and collaborates with the OECD to promote this initiative globally, aligning international efforts for effective implementation.
• Statement 2 is Correct: The GMT aims to curb tax avoidance practices by multinational corporations through profit shifting to low-tax jurisdictions
  • Objective: Multinational corporations (MNCs) often shift profits to countries with little or no corporate taxes (tax havens).
  • The GMT ensures that MNCs pay a minimum level of tax, regardless of where they are headquartered or operate, reducing incentives for profit shifting.
  • Impact:
    • It closes loopholes that allow corporations to exploit differences in tax systems
    • Promotes fairer tax competition among countries and protects government revenues
• Statement 3 is Incorrect: The proposed global minimum tax rate is 25% 
  • The OECD and G20 have proposed a global minimum tax rate of 15%, not 25%
  • This rate ensures a baseline taxation level, preventing a “race to the bottom” where countries compete by offering excessively low tax rates.

Ans: D

Exp:

India has the advantage of achieving carbon neutrality through bioethanol and renewable energy-based electrification but the government needs to create a mechanism to make prices of bioethanol fuel more affordable to make it economically viable for users, Honda Motor Co Ltd Chief Engineer said recently. 

• Biofuels are Hydrocarbon fuels produced from organic matter (living or once-living) in a short time span.
• Types:
  • Solid: Wood, dried plant material, manure
  • Liquid: Bioethanol, Biodiesel
  • Gaseous: Biogas

Applications of Biofuels:

• Replacement or supplement for diesel, petrol, and other fossil fuels
• Used in transport, stationary, portable applications, heat, and electricity generation

Reasons for Shifting to Biofuels:

• Rising oil prices
• Greenhouse gas emissions from fossil fuels
• Benefits to farmers through agricultural crop use

Categories of Biofuels:

First Generation Biofuels:

• Source: Food crops (sugar, starch, vegetable oil, animal fats)
• Examples: Bioalcohols, Biodiesel, Vegetable oil, Bioethers, Biogas
• Advantages: Easy conversion process
• Disadvantages:
  • Impacts food economy
  • Leads to increased food prices and hunger

Second Generation Biofuels:

Statement 1 is Correct: Second-generation biofuels are produced using non-food biomass, such as agricultural residues (e.g., corn stover, rice husks) and woody crops, making them distinct from first-generation biofuels that rely on food crops like corn and sugarcane.

• Source: Non-food crops or inedible parts of food crops (e.g., stems, husks, wood chips)
• Examples: Cellulose ethanol, Biodiesel
• Production Methods: Thermochemical or biochemical processes
• Advantages:
  • Does not impact food economy
  • Emits fewer greenhouse gases than first-generation biofuels
• Disadvantages: Complicated production process

Third Generation Biofuels:

Statement 2 is Correct: Third-generation biofuels are derived from algae, which offer significant advantages over other sources due to their higher yields, rapid growth, and minimal land and water requirements. Algae can also grow in non-arable land, making them a sustainable option.

• Source: Micro-organisms like algae
• Example: Butanol
• Advantages:
  • Utilizes land and water unsuitable for food production
  • Reduces strain on depleted water resources
• Disadvantages: Fertilizers used can cause environmental pollution

Fourth Generation Biofuels:

Statement 3 is Correct: Fourth-generation biofuels incorporate carbon capture and storage (CCS) technologies, enabling them to absorb more carbon dioxide during production than they emit during combustion. This makes them carbon-negative, contributing to net carbon removal.

• Source: Genetically engineered crops with high carbon intake
• Process:
  • Conversion using second-generation techniques
  • Pre-combusted fuel with carbon capture and geo-sequestration
• Advantages:

Carbon-negative; removes carbon from the environment

Ans: B

Exp:

The Jawaharlal Nehru Port Authority (JNPA) in Mumbai is set to become India’s first port to enter top global ports with 10 million TEUs (twenty-foot equivalent units) by 2027, Union Minister of Ports, Shipping & Waterways, said recently after launching projects worth nearly ₹2,000 crore towards expanding capacity at the JNP Port. 

• He also launched one solar powered boat, two indigenously developed 70T tugs and three fire Tenders meant to boost the safety and efficiency of the port.

About Kamarajar Port:

• Formerly known as Ennore Port
• Pair 1 is Correct: Location→ Situated 24 km north of Chennai in Tamil Nadu
• Significance→ 12th major port of India
  • First public company port in India
• Legal Status→ Declared a major port under the Indian Ports Act, 1908 in March 1999
• Ownership→ Owned by Chennai Port Trust, which also operates the Port of Chennai
• Port Model→ Operates under the landlord port model
• Port Authority Role→ Acts as a regulatory body & a landlord
• Port Operations→ Cargo handling and other operations are managed by private companies.

About Vadhvan Port:

• Foundation→ Laid by the Prime Minister on 30th August 2024
• Pair 2 is Correct: Location→ Near Dahanu town, Palghar district, Maharashtra
• Significance→ India’s 13th major port, largest container & deep-water port
• Development→ Constructed by Vadhvan Port Project Limited (VPPL), a joint venture between JNPA (74%) & MMB (26%)

About Mundra Port:

• It is the largest private port and the largest container port in India.
• Pair 3 is Incorrect: Location→ It is located on the north shores of the Gulf of Kutch, near Mundra, Kutch district, Gujarat. 
  • It is a deep-draft, all-weather port.
  • It is also a special economic zone (SEZ).
  • As much as 33 percent of India’s container traffic flows through the port.

About Galathea Port:

• Notification→ Declared a major port in 2024 by the central government
• Pair 4 is Incorrect: Location→ Great Nicobar Island, Andaman & Nicobar Islands
• Type→ International Container Transshipment Port (ICTP)
• Significance→ Will be the 14th major port of India

About Jawaharlal Nehru Port:

• Notification→ Declared a major port in 2024 by the central government
• Pair 5 is Correct: Jawaharlal Nehru Port, also known as Nhava Sheva port, is the largest container port in India. It handles the majority of India’s containerized trade, and is the focal point of long-haul calls to and from the emerging market economy.
• Located in Mumbai, Maharashtra, it is India’s premier container handling port and is set to become one of the top global ports with 10 million TEUs by 2027.