Daily Quiz: UPSC Prelims Marathon- September 26

• CL is the grant of permission by the government to entities to use, manufacture, import or sell a patented invention without the patent-owner’s consent
• CL is permitted under the WTO’s TRIPS (IPR) Agreement
• This provided conditions such as ‘national emergencies, other circumstances of extreme urgency and anti-competitive practices’ are fulfilled.
• The country’s first compulsory licence was granted by the Indian Patent Office to a Hyderabad-based drug-maker Natco.
• A landmark decision, under the amended Indian Patents Act (2005), allowedNatco to make and sell in India, a similar version of Bayer’s Nexavar, an advanced kidney cancer drug.

Statement 2 is correct:

• New Development Bank (NDB) is the first Multi-lateral Development Bank established by developing countries and emerging economies – Brazil, Russia, India, China and South Africa (BRICS) – in accordance with the agreement on New Development Bank signed on 15^thJuly, 2014 in Fortaleza, Brazil. The NDB members represent 42 percent of world population, 27 percent of the global surface area and accounting for over 20% of the Global GDP.
• It is Headquartered at Shanghai with African Regional Centre at Johannesburg.

Statement 1 and 3 is incorrect:

• The five member nations – Brazil, Russia, India, China and South Africa – have an equal shareholding in the NDB

Mission Indradhanush aimed to revamp the functioning of public sector banks so that PSBs can compete with the Private Sector Banks.  The mission is a brainchild of PJ Nayak committee.  It is launched by Ministry of Finance under the Department of Financial Services.  The mission includes the seven key reforms of appointments, board of bureau, capitalisation, de-stressing, empowerment, framework of accountability and governance reforms.  It aims to clean up the balance sheets of PSBs to ensure banks remain solvent andfully comply with global capital adequacy norms, Basel-III.

• Special Economic Zone (SEZ) is a geographical region that has economic laws different from a country’s typical economic laws. Usually the goal is to increase foreign investments.
• Any private/public/joint sector or state government or its agencies can set up an SEZ.
• A SEZ is a designated duty free enclave to be treated as foreign territory for the purpose of trade operations and duties and tariffs.

Before recommending any proposals to the ministry of commerce and industry (department of commerce), the states must satisfy themselves that they are in a position to supply basic inputs like water, electricity, etc.  Companies may be offered tax holidays, where upon establishing in a zone they are granted a period of lower taxation.

To ensure energy security, the Government of India had decided to set up 5 million metric tons (MMT) of strategic crude oil storages at three locations namely, Visakhapatnam, Mangalore and Padur (near Udupi).

• These strategic storages would be in addition to the existing storages of crude oil and petroleum products with the oil companies and would serve as a cushion during any external supply disruptions.
• The crude oil storages are constructed in underground rock caverns and are located on the East and West coast of India. Crude oil from these caverns can be supplied to the Indian Refineries either through pipelines or through a combination of pipelines and ships. Underground rock caverns are considered the safest means of storing hydrocarbons.

An expenditure that neither creates assets nor reduces a liability is categorised as revenue expenditure. If it creates an asset or reduces a liability, it is categorised as capital expenditure.

• The interest paid by the Government of India on all the internal and external loans does not produce any assets, so it is revenue expenditure.
• The salaries and Pension paid by the Government to Government employees is needed to run the Government’s business. It is revenue expenditure.
• The subsidies forwarded by the government to all sectors do not produce any productive asset, so it is revenue expenditure.
• The defense expenditures which are needed for smooth operation of the standing armed forces is a revenue expenditure. However, purchase of equipments produces assets, so that would be a Capital expenditure.
• The postal expenditures and deficits are Revenue expenditures.
• The money spent of maintaining the law and order situation of the country is also revenue expenditures.
• The money spent on various social services such as public health, education, poverty alleviation, scholarships, etc. all revenue expenditures.
• The grants given by the Government of India to states and other countries is Revenue expenditures.

An expenditure which either creates an asset (e.g., school building) or reduces liability (e.g., repayment of loan) is called capital expenditure.

Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital in relation to its risk weighted assets and current liabilities. It is decided by central banks and bank regulators to prevent commercial banks from taking excess leverage and becoming insolvent in the process.
Description: It is measured as
Capital Adequacy Ratio = (Tier I + Tier II + Tier III (Capital funds)) /Risk weighted assets
The risk weighted assets take into account credit risk, market risk and operational risk.
The Basel III norms stipulated a capital to risk weighted assets of 8%. However, as per RBI norms, Indian scheduled commercial banks are required to maintain a CAR of 9% while Indian public sector banks are emphasized to maintain a CAR of 12%.