Topic Covered :
World Bank clears $500 million to improve quality of school education
What lies behind the hike in petrol and diesel prices
IMF advocates contingency reserves for Indian states
Russia agrees to speed up defence deals
WORLD BANK CLEARS $500 MILLION TO IMPROVE QUALITY OF SCHOOL EDUCATION
Why in news?
The World Bank on Sunday said its Board of Executive Directors has approved $500 million (about Rs 3,700 crore) loan to improve quality and governance of school education in six Indian states.
The board approved a loan for Strengthening Teaching-Learning and Results for States Program (STARS) on June 24, 2020, the World Bank said in a statement.
Some 250 million students (between the age of 6 and 17) in 1.5 million schools, and over 10 million teachers will benefit from the program.
The STARS program builds on the long partnership between India and the World Bank (since 1994), for strengthening public school education and to support the country's goal of providing Education for All
Prior to STARS, the bank had provided a total assistance of more than $3 billion towards this goal.
STARS will help improve learning assessment systems, strengthen classroom instruction and remediation, facilitate school-to-work transition, and strengthen governance and decentralised management.
WHAT LIES BEHIND THE HIKE IN PETROL AND DIESEL PRICES
Why in news?
Petrol and diesel prices went up every day since 7 June. In Delhi, the price of petrol was hiked by ₹9.12 per litre between 7 June and 26 June, while that of diesel has gone up by ₹11.01 per litre. Other cities have seen a price rise as well.
Increased Oil prices in International Market :
On 28 April, the price of the Indian basket of crude oil had fallen to as low as $16.19 per barrel. The average price of crude oil in April stood at $19.9 per barrel. Since then, the price of oil has risen.
It averaged at $30.60 per barrel in May.
On 25 June, the price was at $40.66 per barrel. Basically, the price of crude oil has doubled in a period of around two months, as international demand for crude has picked up pace, with the easing of lockdown curbs
For a little over one month up to 6 June, petrol and diesel prices were not increased. They have been going up since then, reflecting the higher price of oil.
Excise Duty :
With the economic activity crashing on the back of the covid-induced lockdown, central government tax revenues took a big beating. Hence, the excise duty on petrol and diesel since then has been increased by ₹10 per litre and ₹13 per litre, respectively.
IMF ADVOCATES CONTINGENCY RESERVES FOR INDIAN STATES
Why in news?
The International Monetary Fund (IMF) has advocated states such as Tamil Nadu should build contingency reserves to meet unforeseen expenditure demands.
A contingency reserve or planning margin could be established for new initiatives to provide flexibility.
A Tamil Nadu Contingency Fund of Rs1.5 billion, or less than 0.1% of total expenditure, already exists in the budget.
Although this fund may handle some limited unforeseen expenditure, it is not appropriate for substantial policy priorities that emerge during the fiscal year.
The IMF said an adequate contingency reserve would amount to 2% or 3% of total expenditure.
Its rules of engagement should be carefully designed so that allocating the contingency reserves does not turn into an alternative budget preparation exercise.
A contingency reserve is a mechanism to address uncertainties, linked with fiscal risks, during execution of the prepared budget for the year.
IMF said it can take several forms.
In many countries, it is an unallocated appropriation in the annual budget law.
In other countries, it is a fund with an appropriate amount of financing authorized under the legal framework and replenished at the beginning of each fiscal year, depending on the drawdown during the previous year.
The benefit of such an appropriation is that urgent but unforeseen needs can be met without seeking additional appropriations or having to cut spending elsewhere, which may lead to the accumulation of arrears.
While the UK and Turkey have contingency reserves of less than 1% of their total expenditure, Canada (close to 2%), Russia (3%), and Philippines (8%) have much higher reserves.
The size of the contingency reserve should not be so large as to undermine budget discipline or so small as to be consistently exhausted part way through the year.
RUSSIA AGREES TO SPEED UP DEFENCE DEALS
Why in news?
Russia has agreed to quickly address some urgent defence requirements sought by India and this was discussed during the recent trip of Defence Minister Rajnath Singh, defence and diplomatic sources said.
The long-pending deals for AK-203 assault rifles and Ka-226T light utility helicopters were also discussed in a review of the entire gamut of defence cooperation.
India will present its requirements soon and Russia has agreed to address them within a few months
The request comes against the backdrop of tensions with China along the Line of Actual Control and the large-scale mobilisation undertaken by the armed forces in response to the massive Chinese build-up.
However, on the S-400 deal, the sources said the deliveries would start by the end of 2021 as scheduled and it was difficult to accelerate the deal any further.
The deal for 200 Ka-226T utility helicopters remains stuck over the level of indigenisation. To reach the indigenisation percentage as specified by the tender, Russia and India are evaluating the possibility of using Indian aviation materials in the production in India, which will give the programme a new indigenisation angle and also an impetus to the domestic aero industry.
Another significant feature of the project is going to be the transfer to India of a number of crucial helicopter engineering technologies, including the unique coaxial scheme technologies