Govt decides to get more bang for its big-ticket buck

To leverage big-ticket purchases by the government and PSUs to serve what it calls ‘‘larger political, economic and security inter...

To leverage big-ticket purchases by the government and PSUs to serve what it calls ‘‘larger political, economic and security interests,’’ the Ministry of External Affairs has proposed that decision-making on purchases worth $100 million and above (Rs 450 crore plus) be confined to a high-level exclusive club: the Cabinet Committee on Security (CCS).

Chaired by the Prime Minister, the CCS has the Home Minister, the Finance Minister, the Defence Minister, the External Affairs Minister, the National Security Adviser and the Deputy Chairman, Planning Commission.

The proposal delineates the following benchmarks:

• Any single overseas purchase of $100 million or above (Rs 450 crore plus) should need the CCS’s approval.

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• Committee of Secretaries should clear single orders worth $20 million and multiple purchases from a specific country touching $100 million.

• A nodal office should maintain such information—this could be the MEA’s investment and technology promotion cell.

The ‘‘trigger’’ for the proposal, sources said, was the Rs 10,000-crore plan to buy aircraft for Air India and Indian Airlines. When it first came up on June 14, 2002, the CCS questioned the inadequacy of the current system in ‘‘single-window tracking’’ of such purchases.

	What’s the current system

			• Any govt dept, PSU, needs Cabinet OK for a project only if its cost exceeds Rs 100 crore. For Navratnas, Cabinet OK is needed only if foreign equity is involved in project • After the OK, they are free to purchase equipment or hire consultancy services from any vendor—domestic or foreign • RBI has to be approached for release of foreign exchange

At the CCS’s behest, therefore, the MEA conducted an internal survey to ascertain individual procurements exceeding $100 million per purchase since 1992.

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It found that while there weren’t separate guidelines from the Ministry of Finance, the Petroleum Ministry had signed 11 contracts of which eight had gone to foreign firms.

The Railways had made one purchase worth $752 million from a Swiss firm in 1993. Shipping had four contracts. The Civil Aviation Ministry had bought 10 aircraft for close to $400 million in 1993-95 and six from Boeing worth $876 million in 1993-97. There was no response from the MoD.

The MEA is of the view that crude oil purchase worth Rs 275 billion could leverage in developing India’s oil equity or other collaborations abroad.

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