Mr Amit Cowshish is a former Financial Advisor (Acquisition), Ministry of Defence and former Distinguished Fellow, Manohar Parrikar Institute for Defence Studies and Analyses, New Delhi. Click here for Detailed Profile
The examination of the detailed demands for grant (DDGs) of the Ministry of Defence (MoD) by the Standing Committee on Defence of the 14th Lok Sabha (2004–05 to 2008–09) and recommendations made by the committee had little impact on the country’s defence budget. While the examination was generally perfunctory, the recommendations were either too general or too impractical to be implemented by MoD. This is the second of two articles that examines how the Standing Committee on Defence of the 15th Lok Sabha (2009–10 to 2013–14) followed the same pattern.
In the run-up to the voting on the budget, detailed demands for grant(DDGs) presented by various ministries to the Parliament are examinedby the departmentally-related standing committees. As Parliamentcannot possibly examine more than 100 DDGs presented to it everyyear, these committees are required to examine them in detail and reportback to the Parliament. One such committee is the Standing Committeeon Defence.
There now seems to be greater recognition of India’s concerns on transfer of technology and not just about co-production but also co-development of next generation weapons. The larger objective for India, however, must be to reduce its dependence on import of foreign equipment and modernize its armed forces in the quickest possible timeframe.
The Guidelines of 2012 have been under review for some time. While a drastic shift in the policy is unlikely, some changes in the policy, clarity about some of the existing provisions and simplification of the procedure seem necessary to make the policy work better.
There are speculations whether the present budget is sufficient to meet expenditure on big ticket items but one has to bear in mind that it is only the advance payment – generally 15% of the contract value – that becomes payable on signing of a new contract. Even if new contracts are signed for say INR 50,000 crore, MoD will require just about INR 7,500 crore for those schemes.
The Defence Minister made two significant points: one, the need for making a significant amount of the nation’s resources available for defence and two, he talked about the slow pace of acquisition of defence equipment as the key concern. These are unexceptional statements of intent and the challenge would be to meet these objectives.
The proposal to relax the present cap on FDI in defence has expectedly drawn sharp reactions. Those who oppose argue that higher FDI is not required and, more importantly, it will not be in national interest, not the least because it will stymie the process of indigenization. This calls for a dispassionate analysis.
Ministry of Defence which accounts for 13-14 per cent of the central government expenditure, if one also takes into account the expenditure on defence pensions, could come under some pressure to prepare an action plan as the outcome of what it does is often intangible, undisclosable, or simply unmeasurable. The author puts forward some suggestions.
From the stage of inception of a procurement proposal till the signing of the contract, the Ministry of Defence (MoD) diligently follows a fairly elaborate procurement procedure for capital acquisitions, as also for revenue procurements. The purpose of laying down a procedure is to minimize discretion and bring in transparency at every stage to eliminate the possibility of undue influence on decision making. But this does not seem to have worked very well for the MoD as instances of corruption keep surfacing every now and then.
Of Agents and Agency Commission in Defence
Of Agents and Agency Commission in Defence