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Dysfunctional Operating Environment in Defence: The Problem

Amit Cowshish is a former Financial Advisor (Acquisition), Ministry of Defence; and also former Consultant, Manohar Parrikar Institute for Defence Studies and Analyses, New Delhi. Click here for Detailed Profile
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  • October 21, 2014

    In the interview he gave to an English news channel last week, the former chief of naval staff said being a service chief is not just about preening about on the national TV when ‘in actual fact you are unable to get a set of batteries for your submarines’.1

    He talked about professional competence, accountability and responsibility of the services not being matched by authority. Clarifying what he meant by authority was the power to approve something, he cited examples of the difficulty in even changing the submarine batteries and commencing repairs and refits of ships, aircraft and submarines in the Indian yards.

    The ‘dysfunctional and inefficient’ operating environment, he said, was the root cause of his resignation.

    The angst – undoubtedly justified – underlying these statements is a commentary on the deep rooted status-quoist tendency not just in regard to larger issue of higher defence management but even comparatively mundane issues like delegation of administrative and financial powers to the armed forces.

    For the record, however, it needs to be mentioned that while the service chiefs do not have any financial power per se, the entire budget is placed at the disposal of the services right in the beginning of the year and there is wide-ranging delegation of administrative and financial powers – both under the revenue and capital segments - to the services to facilitate utilization of funds.

    For example, repairs and refits are scheduled in accordance with the operational-cum-refit cycle prescribed for each class of ship. A three-year schedule of repair and refit is finalised during the annual refit conference (ARC) chaired by the chief of material (COM) at the naval headquarters (NHQ). The proposals for offloading of refits due to constraints of capacity/expertise of the naval shipyards are also finalized during these ARCs.2 To facilitate execution of the finalised schedule, financial powers are delegated to the vice chief of naval staff (VCNS) and the chief of material (COM) for sanctioning repair and refit of ships and crafts.

    This is only an example. Financial powers are delegated under various heads: stores (which would include procurement of batteries), clothing and victual, maintenance, outsourcing of services, transportation, office contingencies and miscellaneous expenditure, training, organization of symposia and conferences, research and development, cash awards for inventions and innovations, employment of temporary establishment or labour (industrial and non-industrial) in excess of the fixed scales, indigenization, etc.

    On the capital side also, the budget is managed by the services. The annual capital acquisition plan is prepared by the service headquarters. Though it requires to be approved by the defence acquisition council, the plan is seldom subjected to any change at this stage. Starting with INR 10 crore in 2006, the financial power delegated to VCNS (as indeed to other services) presently stands at INR 150 crore for each acquisition proposal. The approval-in-principal for such proposals is accorded by the services capital acquisition plan categorization higher committee (SCAPCHC) headed by a three-star service officer in the headquarters integrated defence staff.

    Where, then, lies the rub? What has made the operating environment ‘dysfunctional and inefficient’? Some of this problem is on account of inscrutable issues like ‘integration of the services with the MoD’ or ‘civil-military relations’ but, in large part, the immediate problem lies with MoD’s inability to resolve more mundane issues.

    First and foremost is the issue of the manner of empowerment of services. Through explicit orders and by implicit conduct of MoD over the years, services enjoy considerable authority in regard to practically every aspect of their functioning. This includes matters related to recruitment, training, deployment, procurement of stores, transportation of personnel, execution of civil works, etc.

    However, there is no mechanism to constantly, or even periodically, review the existing scheme of delegation of powers to keep pace with the changing needs. The orders on administrative powers delegated to the services were issued almost 15 years back. The orders on delegation of financial powers to enable the services to execute administrative decisions were last reviewed in 2006. Surely, instituting a mechanism to regularly review the scheme of delegation of administrative and financial powers is not an intractable problem.

    Second, there is something fundamentally wrong with the existing scheme of delegation of powers. Take, for example, the financial power to sanction repair and refit of a ship. The existing delegation of power (since 2006) is as follows3:

    Trough Public Sector Undertakings/Port Trust Authorities Through Trade Abroad when ships are in foreign waters
    COM NHQ – Up to INR 10 crore COM NHQ – Up to INR 3 crore  
    VCNS NHQ – Up to INR 15 crore VCNS NHQ – Up to INR 10 crore VCNS NHQ – Up to INR 3 crore
    JS MoD – Up to INR 25 crore JS MoD – Up to INR 15 crore JS MoD – Up to 5 crore
    AS MoD – Up to INR 50 crore AS MoD – Up to INR 25 crore AS MoD – Up to 10 crore
    Def Sec MoD – Above INR 50 crore Def Sec MoD – Above INR 25 crore Def Sec MoD – Up to Rs 20 crore
        Defence Minister – Above INR 20 crore

    Not only is this architecture arbitrary and hopelessly outdated, it is highly inefficient and needlessly multi-layered. Imagine a ship stranded in foreign waters awaiting approval of the defence minister for getting the necessary repairs carried out, only because the cost involved is more than INR 20 crore!

    Third, these powers are exercisable with the concurrence of integrated financial advisors. Even if it is not a problem area – though, this is how it is widely seen – it does necessarily entail a long processing time. A proposal requiring the approval of the minister needs to go through – apart from the hierarchy in the service headquarters –the under secretary, deputy secretary/director, joint secretary, additional secretary and the defence secretary in MoD and the corresponding levels in the finance division before it reaches the minister.

    Fourth, in the absence of clear instructions on what these functionaries are required to focus on while processing a proposal and given the different backgrounds and competence levels of the functionaries, obtaining necessary approvals could turn out to be an extremely frustrating experience.

    Fifth, the system of examining every proposal on file without any mechanism for collegiate decision making is inherently inefficient. Limited use of information technology has exacerbated this problem.

    These are not complicated issues that defy a quick solution. Resolving them is certainly not a panacea but it would go a long way in setting right the ‘dysfunctional and inefficient environment’ that drove the previous naval chief to resign in sheer frustration.

    Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India

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