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Do you put your money to work? Is investing in IPO a better option? Why do companies bring IPO? What is the relation of equity market with the economy of the country?

In this article, we shall discuss the reason behind the IPO Boom’ in India, how are these issues performing on the market after listing and what kind of value addition do they bring to the table.

What is an IPO?

• Every company needs money to grow and expand.
• They do this by borrowing or by issuing shares.
• If the company decides to opt for the second route of issuing shares, it must invite public investors to buy its shares.
• This is its first public invitation in the stock market and is called the Initial Public Offering (IPO).

Do you know?

The Dutch are credited with conducting the first modern IPO by offering shares of the Dutch East India Company to the general public.

What does it mean for investors to buy shares?

• When one buys such shares, he/she makes an IPO investment.
• He/she gets ownership in the company, proportionate to the value of your shares.
• These shares then get listed on the stock exchange.
• The stock exchange is where you can sell your existing shares in the company or buy more.

How does an IPO work?

• The Securities and Exchange Board of India (SEBI) regulates the entire process of investment via an IPO in India.
• A company intending to issue shares through IPOs first registers with SEBI.
• SEBI scrutinises the documents submitted, and only then approves it.

Who can hold IPOs?

• It could be a new, young company or an old company which decides to be listed on an exchange and hence goes public.

Trading of shares

• The company which offers its shares, known as an ‘issuer’, does so with the help of investment banks.
• After IPO, the company’s shares are traded in an open market.
• Those shares can be further sold by investors through secondary market trading.

Why are IPOs held?

Some of the main motivations for undertaking an IPO include:

• Raising capital from the sale of the shares
• Providing liquidity to company founders and early investors and
• Taking advantage of a higher valuation

Benefits offered by IPO

• Cheaper avenues of raising capital
• More exposure, prestige and enhanced public image
• Creating multiple financing opportunity through equity, convertible debt etc

Limitations of IPO

• Disclosure of sensitive financial and business information
• Risk of company performance in future
• Risk of litigation by investors
• Market pressure
• Cost of trading (transaction cost) borne by the investors

Why is there a boom of IPOs in India?

There are multiple reasons for the spike IPOs:

• Monetary push: In in a bid to boost the economy, central banks and governments over the world have been pumping money into the economy.
• Liquidity: This money with people is finding its way into the stock markets.
• Lower interest rates: As long as the interest rates remain low, investor enthusiasm remains and investors keep making listing gains on the last few issues.
• Retailers’ entry: Besides big institutional investors, recent months have seen a hoard of first-time retail investors entering the markets.
• Regulatory boosts: Positive changes in the regulatory environment are also forging IPOs as a sustainable path for scaled companies. The SEBI has been highly proactive in this regard.

Concerns raised

• The RBI has warned that there is a disconnect between Indian stock markets and the economy, which could pose a risk to the country’s financial stability.
• There is a question of sustainability of the spike in stock market.

Conclusion

• As a growing economy, India offers tremendous opportunities for entrepreneurs to build global companies.
• A very active early-stage VC ecosystem enables entrepreneurs to take that risk in the early stages, and a buoyant private equity market enables strong early-stage businesses to access growth capital.
• It is only natural to see a lot more IPOs in the future as these companies scale up.
• A knowledgeable and active public market ecosystem with active retail participation alongside FIIs is expected to make the country a solid story for the years to come.

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Topics for Today’s questions:

GS-1            Indian culture will cover the salient aspects of Art Forms, literature and Architecture from ancient to modern times.

GS-2          Bilateral, regional and global groupings and agreements involving India and/or affecting  India’s interests.

GS-3          Conservation, environmental pollution and degradation, environmental impact assessment.

GS-4          Contributions of moral thinkers and philosophers from India and the world.

Question 1)

Q.1 Explain with the help of suitable examples from the Indian context, how, numismatics is a vital tool in deciphering the history of country. (10 Marks)

Question 2)

Q.2 India-US relationship is a strategic partnership based on convergence of interests and shared value; a partnership, mature enough to accommodate divergence in worldview of both the countries. Discuss. (15 Marks)

Question 3)

Q.3 Commenting on the approach followed by India in its Long Term – Low Emission Development Strategy (LT- LEDS) to achieve net zero emission target, highlight the key features of the strategy. (15 Marks)

Question 4)  

Q.4 Highlight the role played by Dr. B.R. Ambedkar in paving the way for social equality in India. Examine the reasons behind the continued presence of social inequality in the country. (10 Marks)

HOW TO ATTEMPT ANSWERS IN DAILY ANSWER WRITING ENHANCEMENT(AWE)?

1. Daily 4 questions from General studies 1, 2, 3, and 4 will be provided to you.

2. A Mentor’s Comment will be available for all answers. This can be used as a guidance tool but we encourage you to write original answers.

3. You can write your answer on an A4 sheet and scan/click pictures of the same.

4.  Upload the scanned answer in the comment section of the same question.

5. Along with the scanned answer, please share your Razor payment ID, so that paid members are given priority.

6. If you upload the answer on the same day like the answer of 11th  February is uploaded on 11th February then your answer will be checked within 72 hours. Also, reviews will be in the order of submission- First come first serve basis

7. If you are writing answers late, for example, 11th February is uploaded on 13th February , then these answers will be evaluated as per the mentor’s schedule.

8. We encourage you to write answers on the same day. However, if you are uploading an answer late then tag the mentor like @Staff so that the mentor is notified about your answer.

*In case your answer is not reviewed, reply to your answer saying *NOT CHECKED*. 

1. For the philosophy of AWE and payment: 

Topics for Today’s questions:

GS-1            Indian culture will cover the salient aspects of Art Forms, literature and Architecture from ancient to modern times.

GS-2          Effect of policies and politics of developed and developing countries on India’s interests

GS-3          Basics of cyber security

GS-4          Emotional intelligence-concepts, and their utilities and application in administration and governance.

Question 1)

Q.1 Highlighting the basic tenets of the Bhakti movement, emphasize upon the role of woman saints in the movement. (10 Marks)

Question 2)

Q.2 India’s “balancing act” till now in the ongoing Ukraine crisis can be said to be borne out of mature strategic thinking based on national interest. Do you think India should go a step forward and try to broker peace between Russia and Ukraine? (15 Marks)

Question 3)

Q.3 Highlighting different kinds of cyberthreats faced by India, evaluate the current status of cybersecurity framework in the country. (10 Marks)

Question 4)  

Q.4 “Emotional Intelligence is the ability to make your emotions work for you instead of against you.” Do you agree with this view? Discuss. (10 Marks)

HOW TO ATTEMPT ANSWERS IN DAILY ANSWER WRITING ENHANCEMENT(AWE)?

1. Daily 4 questions from General studies 1, 2, 3, and 4 will be provided to you.

2. A Mentor’s Comment will be available for all answers. This can be used as a guidance tool but we encourage you to write original answers.

3. You can write your answer on an A4 sheet and scan/click pictures of the same.

4.  Upload the scanned answer in the comment section of the same question.

5. Along with the scanned answer, please share your Razor payment ID, so that paid members are given priority.

6. If you upload the answer on the same day like the answer of 11th  February is uploaded on 11th February then your answer will be checked within 72 hours. Also, reviews will be in the order of submission- First come first serve basis

7. If you are writing answers late, for example, 11th February is uploaded on 13th February , then these answers will be evaluated as per the mentor’s schedule.

8. We encourage you to write answers on the same day. However, if you are uploading an answer late then tag the mentor like @Staff so that the mentor is notified about your answer.

*In case your answer is not reviewed, reply to your answer saying *NOT CHECKED*. 

1. For the philosophy of AWE and payment: 

Topics for Today’s questions:

GS-1            Social empowerment, communalism, regionalism & secularism.

GS-2          Structure, organization and functioning of the Executive and the Judiciary

GS-3          Conservation, environmental pollution and degradation, environmental impact assessment.

GS-4          Emotional intelligence-concepts, and their utilities and application in administration and governance.

Question 1)

Q.1 Describe the reasons for the problem of communalism in the country and discuss the suitability of Indian model of secularism in addressing this problem. (10 Marks)

Question 2)

Q.2 Judicial governance means that all judges who are constitutionally entrusted with the responsibility of protecting the rights of citizens must also be seen to be persons of rectitude. Discuss. (10 Marks)

Question 3)

Q.3 The Methane Alert and Response System (MARS) initiative has been launched with an intention to strengthen the efforts towards tackling methane emissions. Highlighting the working of MARS, comment on its usefulness. (10 Marks)

Question 4)  

Q.4 “Emotional intelligence can be the game changer for high performance and personal leadership”. Define emotional intelligence and explain its importance for a public servant in the light of above statement. (10 Marks)

HOW TO ATTEMPT ANSWERS IN DAILY ANSWER WRITING ENHANCEMENT(AWE)?

1. Daily 4 questions from General studies 1, 2, 3, and 4 will be provided to you.

2. A Mentor’s Comment will be available for all answers. This can be used as a guidance tool but we encourage you to write original answers.

3. You can write your answer on an A4 sheet and scan/click pictures of the same.

4.  Upload the scanned answer in the comment section of the same question.

5. Along with the scanned answer, please share your Razor payment ID, so that paid members are given priority.

6. If you upload the answer on the same day like the answer of 11th  February is uploaded on 11th February then your answer will be checked within 72 hours. Also, reviews will be in the order of submission- First come first serve basis

7. If you are writing answers late, for example, 11th February is uploaded on 13th February , then these answers will be evaluated as per the mentor’s schedule.

8. We encourage you to write answers on the same day. However, if you are uploading an answer late then tag the mentor like @Staff so that the mentor is notified about your answer.

*In case your answer is not reviewed, reply to your answer saying *NOT CHECKED*. 

1. For the philosophy of AWE and payment: 

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Context

• India and ASEAN region is celebrating 30th Anniversary of their ASEAN-India Dialogue Relations in 2022.
• The year is embarked as ‘ASEAN-India Friendship Year’.
• The year also witnessed few key bilateral visits and meetings.

Key takeaways from the dialogue

• Member states of ASEAN and India have decided to establish meaningful, substantive and mutually beneficial Comprehensive Strategic Partnerships.
• Both sides also reaffirmed the importance of maintaining ASEAN Centrality in the evolving regional architecture in the Indo-Pacific.
• Both sides decided to enhance cooperation on cyber security, counter terrorism and digital economy and expedite the review of ASEAN-India Trade in Goods Agreement.

What is ASEAN?

• ASEAN is a political and economic union of 10 member states in Southeast Asia.
• It brings together ten Southeast Asian states – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – into one organisation.
• It was established on 8th August 1967 in Bangkok, Thailand with the signing of the Bangkok Declaration by the founding fathers of the countries of Indonesia, Malaysia, Thailand, Singapore, and the Philippines.
• The preceding organisation was the Association of Southeast Asia (ASA) comprising of Thailand, the Philippines, and Malaysia.
• Five other nations joined the ASEAN in subsequent years making the current membership to ten countries.

India-ASEAN Relations: A Backgrounder

• Look-East Policy in 1992 gave an upthrust to India -ASEAN relation and helped India in capitalizing its historical, cultural and civilizational linkages with the region.
• India entered into a Free Trade Agreement (FTA) in goods with the region in 2003 which has facilitated the bilateral trade which now stands at approximately USD 76 Billion.
• Further, the launch of Act East Policy in 2014 has added a new vigour to India-ASEAN relations.

Five-key focus areas for India and ASEAN

(1) Connectivity

• Physical connectivity remains a constraint in India-ASEAN trade relations.
• However, infrastructure projects like Trilateral Highway connecting India’s Northeast to Thailand, the Data Deep-sea Port in Myanmar, and the Kaladan Multi-modal Transit Transport Project have the potential to overcome the infrastructure bottleneck.  

(2) Maritime Security

• The maritime space in today’s world plays a key role not only in economic development but also in security and connectivity.
• Piracy, disputes over resources, territorial claims, terrorism, China’s increasing assertiveness, and a fractured governance system are creating instability in the Indo-Pacific region.

(3) Blue Economy

• Given India’s vast Exclusive Economic Zone (EEZ), there is huge potential in this sector that remains to be realized.
• India should deepen its engagement with ASEAN on this front through developing PPP models for fisheries sectors, knowledge sharing and joint efforts to conserve and manage coastal and marine resource.

(4) Strategic Relations

• India and ASEAN forged a strategic partnership in 2012.
• The further elevation of ties is focused on some specific areas – maritime security, joint implementation of projects in the Indo-Pacific, cybersecurity and inter-operability of digital financial systems.

(5) Other

• India and ASEAN focus on greater knowledge sharing and developing best practices for fostering inclusive growth.
• Policies governing cyberspace and cyber securities are in their nascent stage, in such scenario both India and ASEAN should seek to be a decisive voice in norm-setting, and in cultivating inter-regional cooperation for addressing cyber insecurity.

Issues in ties

• Trade imbalances: In bilateral trade, there is an imbalance as the majority of ASEAN countries have strong manufacturing bases that rely on export while Indian export remains feeble.
• Nature of engagement: India still engages more with ASEAN countries on a bilateral basis rather than on a multilateral basis.
• Limited financial outreach: India’s has a limited capacity to provide development assistance and other financial relation.
• Chinese presence:  ASEAN’s inclination to harness India for regional stability remains limited because of the presence of other regional powers like China.
• No strategic vision: ASEAN and India are yet to fully converge on a joint vision for the maritime domains of Asia and the world at large.

Why does ASEAN hold immense significance for India?

• Convergence on Indo-Pacific: Engagement with ASEAN has been, and will remain, a critical element of India’s ‘Act East’ policy and ‘Indo-Pacific’ initiative.
• Security convergence: India needs a close diplomatic relationship with ASEAN nations both for economic and security reasons.
• Improving presence: Connectivity with the ASEAN nations can allow India to improve its presence in the region.
• Connectivity with NE: These connectivity projects keep Northeast India at the centre, ensuring the economic growth of the northeastern states.
• Countering China: Improved trade ties with the ASEAN nations would mean a counter to China’s presence in the region and economic growth and development for India.
• Rule-based order in the region: ASEAN occupies a centralised position in the rules-based security architecture in the Indo-Pacific. Rogue neighbourhood is a liability of healthy growth.

Inherent issues with ASEAN

• Inequality matrix: Gap between rich and poor ASEAN member states remains very large and they have a mixed record on income inequality. While Singapore boasts the highest GDP per capita—nearly $53,000 (2016), Cambodia’s per capita GDP is the lowest at less than $1,300.
• Development disparity: Many regional initiatives are not able to be incorporated into national plans, as the less developed countries faced resource constraints to implement the regional commitments.
• Mixed nature of polity: The members’ political systems are equally mixed with democracies, communist, and authoritarian states.
• Contention with China: Every ASEAN member is exposed to the manipulations by China over the South China Sea.
• Lack of consensus: ASEAN has been divided over major issues of human rights. For example, crackdowns in Myanmar against the Rohingyas. The emphasis on consensus sometimes becomes a chief drawback.

Way forward

• India has cultivated strong bonds of historical and contemporary significance with the ASEAN.
• This relation can offer the region a natural recourse to peace, unlike the many conflicts that the ASEAN countries are involved in with China.
• There are opportunities for ASEAN and India to build long term partnership by sharing medical technologies and traditional medicine knowledge.
• Three potential areas for ASEAN-India partnership are Health security, digital economy and green sustainable development. India and ASEAN can work together to address the digital gap by solution and expertise sharing.
• Further, some emerging areas of cooperation could be cryptocurrency, making use of social media as a medium of change and exchange for digital payments, lucid involvement of MSMEs in financial digitalization, and participation in global value chains.

(Click) FREE1-to-1 on-call Mentorship by IAS-IPS officers | Discuss doubts, strategy, sources, and more

Topics for Today’s questions:

GS-1            Social empowerment, communalism, regionalism & secularism.

GS-2           Bilateral, regional and global groupings and agreements involving India and/or affecting  India’s interests.

GS-3          Inclusive growth and issues arising from it.

GS-4          Case Studies

Question 1)

Q.1 Regionalism in India is not a new topic of debate and is strengthening its roots slowly and steadily. In this context, differentiate between region and regionalism. Analyse the major issues that lead to the demand for regionalism in India and how it is a challenge for national integration? (15 Marks)

Question 2)

Q.2 Although the India-Russia relationship stands strained by the larger geopolitical realities which neither of them is in completely control of, there exists significant potential for cooperation between the two sides. Discuss. (15 Marks)

Question 3)

Q.3 Without substantially fostering rural India’s growth, the Indian growth story cannot be claimed to be inclusive. Highlighting the challenges in rural growth, suggest solutions for the same. (10 Marks)

Question 4)  

Q.4 The farmer unions in one of the states has called for mass protest owing to large number of arrears/their dues not being paid by the private sugar factories for the last two years. On the day of mass protest, farmers turned up in huge numbers and at several places the protest turned violent. There were instances of stone pelting, vehicle burning etc. The police were not able to control the violent protesters at some places and had to resort to lathi charge. But at one of the places, police resorted to firing in which four farmers were killed. This further aggravated the situation as farmers at other places also resorted to violence to protest against police action. Looking at the intensity of the situation, under opposition pressure, one of the Minister of the state gave the statement that farmers did not die due to police firing but there were some anti-social elements amongst the protesters who fired in order to create unrest in the state. This statement of the Minister instead of calming the protesters further angered them as some eyewitness testified to news channels about the deaths being the result of police firing. All this further projected government in bad light and the police action has come under severe criticism by various sections of intelligentsia. The public sentiment has started to sway in favour of the protesting farmers. There is huge pressure on the government to diffuse the tension, address farmers’ grievances and take action against the police personnel involved in firing at the protesters since the protesters have started blocking all the major state highways which has crippled the day-to-day routine of the people of the state. Further, there is danger that the situation may get out of control anytime. Suppose you are the district magistrate where the incident has taken place: a) You have to address the press conference. What will be your statement to the media if it seeks clarification on whether people died in the police firing as stated by the state minister? b) What are the ethical issues involved in the case? c) What steps will you take to tackle the post-firing situation effectively? (20 Marks)

HOW TO ATTEMPT ANSWERS IN DAILY ANSWER WRITING ENHANCEMENT(AWE)?

1. Daily 4 questions from General studies 1, 2, 3, and 4 will be provided to you.

2. A Mentor’s Comment will be available for all answers. This can be used as a guidance tool but we encourage you to write original answers.

3. You can write your answer on an A4 sheet and scan/click pictures of the same.

4.  Upload the scanned answer in the comment section of the same question.

5. Along with the scanned answer, please share your Razor payment ID, so that paid members are given priority.

6. If you upload the answer on the same day like the answer of 11th  February is uploaded on 11th February then your answer will be checked within 72 hours. Also, reviews will be in the order of submission- First come first serve basis

7. If you are writing answers late, for example, 11th February is uploaded on 13th February , then these answers will be evaluated as per the mentor’s schedule.

8. We encourage you to write answers on the same day. However, if you are uploading an answer late then tag the mentor like @Staff so that the mentor is notified about your answer.

*In case your answer is not reviewed, reply to your answer saying *NOT CHECKED*. 

1. For the philosophy of AWE and payment: