Defence purchases to be hit as funds go for overheads
The finance ministry has cut around Rs 13,000 crore out of the Rs 94,588 crore allocated to the defence ministry in the Union Budget last July.
A defence ministry official, who has knowledge of the revised budgetary allocation which was finalised in December last, told the FE, “We are re-appropriating Rs 13,000 crore from the armed forces’ capital outlays towards revenue expenditure.”
What this means is that the finance ministry has decided to take away some funds meant for buying weapons and equipment to pay off the salaries and recurring maintenance expenses, which has grown beyond manageable limits. In July, finance minister Arun Jaitley had allocated Rs 1,34,412 crore towards revenue expenditure of the defence ministry.
The capital budget for the Indian Navy and the Air Force have been cut between Rs 4,000 crore to Rs 5,000 crore, which means that no new defence acquisition contract may be signed this fiscal, including the much-awaited deal for 126 Medium Multi-Role Combat Aircraft (MMRCA) ‘Rafale’ from the French firm Dassault Aviation. Also, sources revealed that the Indian Navy which is currently in talks with the US-based Sikorsky for 16 helicopters has been asked to go slow as there are no funds for new acquisitions.
Even the Indian Army is faced with a nearly Rs 4,000- crore cut in its capital budget this fiscal, forcing it to bring down its more than 100 proposals for weapons and equipment acquisition to 20 important ones, of which seven critical ones are being fast-tracked by the government.
The Chief of Army General Dalbir Singh, at his annual press conference earlier this week, said the force has “over 100 projects for weapons and equipment, but has identified 20 important ones, of which seven critical ones are being fast-tracked.”
The army chief listed seven critical acquisitions, including the already-cleared mounted-guns systems, which would be the first that India would buy if this procurement goes through. Defence Acquisition Council (DAC) headed by defence minister Manohar Parrikar has given the nod for the purchase of 814 mounted artillery guns at a cost of Rs 15,700 crore.
The others on the list, all of which have already been approved by the government, are the 8,000-odd Spike third-generation anti-tank guided missiles to be bought from Israel; 131 light utility helicopters that will be a ‘Make in India’ project now; upgradation of the entire fleet of battle tanks and infantry combat vehicles; assault rifles for the infantrymen; bullet-proof jackets and helmets, again for infantrymen; and night-vision devices for the mechanised forces and the infantry.
A December 2014 report on the Budgetary Demands for Grants for 2014-15, submitted by the parliamentary standing committee on defence, noted that “growth in the budget is not sufficient for the projects and modernization” of the forces. The committee was headed by BJP MP Maj Gen (retd) BC Khanduri.
“The committee perceives it to be a grim and unacceptable situation, which is affecting all the services of defence forces considerably. The committee desires that the ministry should raise the bar and gradually increase defence expenditure to the level of three per cent of the GDP so that modernization of the armed forces can become a reality and not remain a mirage,” the report said.
It also noted that as money for high-value acquisitions like the MMRCA is not available under the current allocation, additional funds will be sought. It has to be seen if the defence ministry makes the additional demand this fiscal or in the next, beginning April 2015.
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