During the last fiscal year, the Defence Ministry utilised only 87.21 per cent of the revised allocation of Rs 2,22,370 crore made in December. The Ministry was originally allocated Rs 2,29,000 crore by Finance Minister Arun Jaitley in his maiden budget last July. This was the lowest utilisation of defence budget in at least the past six years. In 2009-10, the Defence Ministry had used 4 per cent more than its original budget, but it came down to 99.9 per cent in 2013-14.
This was pointed out by the parliamentary standing committee on defence in its sixth report presented to the Lok Sabha.
While the Ministry was unable to use its allocated budget, the Defence Secretary informed the committee that sufficient defence budget was not allocated for capital to maintain the 30:40:30 ratio in defence equipment: 30 per cent for state-of-the-art equipment, 40 per cent for current equipment and 30 per cent for equipment going into obsolescence.
“To achieve those percentages, our assessment is that 38 per cent capital is not enough. We need to do much more than that. One major reason why we persist with not so healthy percentage is that I do not get enough budget for capital,” the defence secretary told the committee.
Last year, only Rs 5,402 crore out of the capital budget were spent for procuring new items while Rs 61,157 crore went into paying for previously signed contracts. This year, Rs 6,070 crore has been allocated for new items while Rs 71,336 crore will go towards already committed liabilities.
The committee has recommended that capital allocation and expenditure should thus be a “Non-lapsable and Roll-on” allocation.
The report also highlights that the government does not know the value of indigenized production of defence equipment, armament and ammunition and there is no method available to ascertain this data. The defence services had bought indigenous equipment worth Rs 31,503 crore in 2013-14 while they imported items to the tune of Rs 35,006 crore.
When it comes to supplying equipment to the armed forces, all the Defence Public Sector Undertakings (DPSU) have a poor record of delivery. Against an order of 180 Su30MKI aircraft by 2013-14, Hindustan Aeronautics Limited (HAL) has produced only 150 aircraft. HAL has produced only 78 ALH-159 helicopters when it was supposed to supply 138 helicopters by 2013-14.
The Bharat Electronics Limited claims an on-time delivery of nearly 80% in the past five years. Similarly, Bharat Dynamics Limited has delivered MILAN-2T (anti-tank guided missile), Konkurs-M (anti-tank guided missile) and Akash SAM beyond the scheduled time. Even then, the committee noted that seven of the nine DPSUs are running in profit.
As part of the offset commitments of production by Indian partners of foreign defence manufacturers, 25 contracts have been signed by the defence ministry with foreign companies so far. The total offset obligations from 2008 to 2022 are valued at Rs 29,274 crores. However, the defence ministry has imposed a penalty of $34.6 million in 11 offset contracts because the concerned foreign company did not deliver the promised offsets.
The standing committee, headed by BJP MP Major General BC Khanduri (retd), has pointed out that while the Chinese army can reach the borders within two or three hours, Indian Army takes more than a day to reach there. It particularly noted the critical state of roads in Tawang area of Arunachal Pradesh.
The government has identified 73 roads as strategic India-China border roads. The Border Roads Organisation (BRO) was supposed to complete 61 strategic roads — with a total length of 3,410 km — on the Chinese border by 2012, but has completed only 19 roads of 625 km length so far. Work on two roads has not even started due to pending wildlife clearance and approval of alignment from the Home Ministry.
The BRO told the committee 16 of these strategic roads are likely to be completed this year while 13 roads will be completed in 2016, and 9 in 2017.
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