Daily Current Affairs for UPSC – 3 February 2023

Daily Current Affairs for UPSC 2023

Q) Recently seen in news, the term ‘Reverse Flipping’ is best related to which one of the following?

1. The reversal of the ozone depletion in the stratosphere
2. The recovery of an economy from a depression
3. Increase in biodiversity due to conservation efforts
4. The process of shifting the domicile of a company back to its origin

Daily Current Affairs for UPSC – 2 February 2023

Explanation:

• Option (4) is correct: Reverse Flipping is the process of shifting the domicile of those companies back to India who flipped earlier. Companies reverse flip because of easy access to capital from private equity and venture capital, changes in rules regarding round-tripping, and the growing maturity of India’s capital market. Economic Survey 2022-23 has observed that the Indian start-ups are exploring ‘reverse flipping’, or shifting their domicile back to India.
• Flipping is the process of transferring the entire ownership of an Indian company to an overseas entity, accompanied by a transfer of intellectual property (IP) and all data hitherto owned by the Indian company.
• This effectively transforms an Indian company into a 100% subsidiary of a foreign entity, with the founders and investors retaining the same ownership via the foreign entity, having swapped all shares.
• The phenomenon reflects start-ups venturing out for short-term gains in the dynamic, uncertain geopolitical world.
• Flipping happens at the early stage of the start-ups, driven by commercial, taxation and personal preferences of founders and investors.

Q) Consider the following statements about the Union budget 2023-24:

1. ‘PM-PRANAM’ aims to promote the use of eco-friendly packaging materials in fast-moving consumer goods.
2. The ‘Green Credit Program’ is launched under the Biological Diversity Act, 2002, to incentivize environmentally sustainable practises by companies.
3. The National Green Hydrogen Mission aims to reach a target of an annual production of 50 MMT of green hydrogen by 2035.

Which of the statements given above are not correct?

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

Explanation:

• Statement 1 is incorrect: The 2023-24 budget has allocated Rs 3,079.40 crore to the Ministry of Environment, Forest and Climate Change, which is a 24 per cent increase from last year’s Rs 2,478 crore. PM-PRANAM (PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth) aims to incentivize States and Union Territories to promote alternative fertilizers and balanced use of chemical fertilizers. Its objective is to bring down the government’s subsidy burden, which is estimated to reach Rs. 2.25 lakh crore in 2022-23.
• Statement 2 is incorrect: Green Credit Programme is announced under the Union budget 2023-24. It will be notified under the Environment (Protection) Act, 1986. It will incentivize environmentally sustainable and responsive actions by companies, individuals and local bodies, and help mobilize additional resources for such activities.
• Statement 3 is incorrect: National Green Hydrogen Mission will facilitate transition of the economy to low carbon intensity, reduce dependence on fossil fuel imports, and make the country assume technology and market leadership in this sunrise sector. India aims to reach a target of an annual production of 5 MMT of green hydrogen by 2030.

Q) With reference to ‘Yaya Tso’, consider the following statements:

1. It is a natural lake located in the state of Sikkim.
2. Endangered species like bar-headed goose and black-necked crane are found here.
3. It is listed as a biodiversity heritage site under the Biological Diversity Act, 2002.

Which of the statements given above is/are correct?

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

Explanation:

• Statement 1 and 3 are incorrect: Yaya Tso has been proposed to become Ladakh’s first biodiversity heritage site. Yaya Tso, known as birds’ paradise for its beautiful lake is located at an altitude of 4,820 metres and will be Ladakh’s first BHS under the Biological Diversity Act. The proposed Yaya Tso site will have an approximate area of 60 square kilometres, which will also include the lake’s watershed and the lake could be reached from Mahe monastery on the way to Tsomoriri Lake after driving up to the nunnery and then crossing a small mountain pass.
• Statement 2 is correct: Yaya Tso is a nesting habitat for a large number of birds and animals, such as the bar-headed goose, black-necked crane and brahminy duck. It is one of the highest breeding sites of the black-necked crane in India. Biodiversity Heritage Sites (BHS) are areas that are unique, ecologically fragile ecosystems having rich biodiversity comprising of any one or more of the components such as; species richness, high endemism, presence of rare, endemic and threatened species, keystone species, species of evolutionary significance, wild ancestors of domestic/cultivated species or landraces or their varieties, past pre-eminence of biological components represented by fossil beds and having cultural or aesthetic values.

Q) Consider the following statements about Mangroves:

1. They can sequester up to four times more carbon than tropical rainforests.
2. Both India and China are members of the Mangrove Alliance for Climate.
3. The ‘MISHTI’ initiative will help in the conservation of mangrove plantations along the coastline of Indian Ocean littoral states.

Which of the statements given above is/are correct?

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

Explanation:

• Statement 1 is correct: Mangrove forests consisting of trees and shrub and live in intertidal water in coastal areas. Mangrove forests support a rich food web, with molluscs and algae-filled substrate acting as a breeding ground for small fish, mud crabs and shrimps, thus providing a livelihood to local artisanal fishers. Mangrove plantations have shown to make coastal lands resilient, preventing flooding, land erosion and acting as a buffer for cyclones. Mangrove trees can grow in saline waters, and can sequester up to four times more carbon than tropical rainforests. They act as effective carbon stores, holding up to four times the amount of carbon as other forested ecosystems.
• Statement 2 is incorrect: At the 27th session of Conference of Parties (COP27), the Mangrove Alliance for Climate (MAC) was launched with India as a partner. MAC seeks to educate and spread awareness worldwide on the role of mangroves in curbing global warming and its potential as a solution for climate change. United Arab Emirates (UAE), Indonesia, India, Sri Lanka, Australia, Japan, and Spain are members of the MAC. India holds around 3% of South Asia’s mangrove population. India has such forests on both its Eastern and Western coasts with the Sundarbans in Bengal being one of the largest mangrove forests on the planet.
• Statement 3 is incorrect: MISHTI (Mangrove Initiative for Shoreline Habitats & Tangible Incomes) aims at intensive afforestation of coastal mangrove forests. It will facilitate mangrove plantation along India’s coastline and on salt pan lands. It will operate through convergence between MGNREGS, Campa Fund and other sources.

Q) With reference to ‘Angel tax’, consider the following statements:

1. It is paid by listed company on the capital raised by issuing the shares.
2. It is not levied on the startups incorporated in India.

Which of the statements given above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Explanation:

• Both statements are incorrect: Angel tax is the tax that unlisted companies (startups) have to pay on the capital they raise through the issue of shares. The tax was previously known as Section 56 (2) (vii b) of the Income Tax Act, and it taxes funds raised by startups in India, if they exceed the fair market value of the company. The tax was introduced to detect money laundering practices and catch bogus startups. Indian Startups offering their shares to foreign investors may have to pay ‘angel tax’. The new finance bill has proposed to amend Section 56(2) VII B of the Income Tax Act which involves taxing equity investment from a resident for the issue of shares that exceeds the face value of such shares. According to the proposed amendment, foreign investors will also come under the ambit of the law. Funding from a foreign investor will now be counted as income and be taxed. The funding to Indian startups dropped by 33 per cent to $24 billion in 2022, as compared to the previous year. Foreign investors have played a big role in increasing the valuation. The new law could compel more startups to flip overseas, as foreign investors may not want additional tax liability due to their investment in the startup.

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