The difference in Budgetary Estimate (BE) 2018-19 and 2017-18 of Rs 7,494.12 crore is “quite minimal” in view of the likely cost escalation due to inflation to meet requirements of Capital acquisition and other works planned for 2018-19, says a report by a Parliamentary panel on Defence tabled in the ongoing Budget session of Parliament which has been hit by adjournments due to uproarious scenes.
In its 97-page report, the Parliamentary Standing Committee on Defence chaired by Major General B C Khanduri (Retd) and including former Prime Minister H D Deve Gowda and veteran BJP leader Dr Murli Manohar Joshi suggested that the Ministry of Defence needs to strongly put its case before the Ministry of Finance for adequate allocation of funds, commensurate with the requirement of the modernisation and acquisition plans for 2018-19.
The committee was told by the Vice Chief of Army Staff (VCOAS) in a candid submission that the marginal increase in capital budget allocation for the Army had dashed their hopes as it was barely enough to meet the rise in expenses on account of inflation, and did not even cater to the taxes.
He told the Committee that allocation for modernisation in 2018-19 was insufficient to cater to committed liabilities, ongoing schemes, ‘Make in India’ projects, infrastructural development, policy of strategic partnership of foreign and Indian companies and procurement of arms and ammunition.
The committee was particularly alarmed to note from his oral evidence that although the Ministry of Defence had delegated financial powers up to Rs 14,097 crore to the VCOAS towards security related issues, there was no separate allocation for this in the capital budget allocation in 2018-19. Hence, the Ministry is left with no other option but to reduce resources for security of military stations or compromise on other acquisitions.
Besides the Army, representatives of the Navy in their presentation before the Committee, spelt out the impact of low allocations of capital budget for the Navy, viz constrained progress of new schemes and ability to conclude contracts, delay in induction of critical capabilities and attendant cost overruns, impact on progress of infrastructure projects and mitigation of shortage of accommodation, and setback to pace of modernisation of Indian Navy.
Based on the dismal scenario painted by the representatives of the three services, the committee was aghast and urged the Ministry of Defence to ensure that the allocations to the Services be suitably enhanced at the revised estimate stage so as to enable them to meet the requirements of highest level of operational readiness.
The committee, in the wake of recent attacks on military stations and accommodations, recommended that separate budget may be provided to the services for ensuring security of military establishments.
The committee noted that an amount of Rs 93,982.13 crore has been allocated to the Ministry of Defence for capital outlay on Defence Services in Budget Estimates (BE) 2018-19.
An amount of Rs 74,115.99 crore and Rs 9,318.05 crore, respectively, has been allocated for capital acquisition (including DGOF supplies) and land and works of the three Services (including Married Accommodation Projects) for 2018-19.
An amount of Rs 10,548.09 crore has been granted for Defence Research and Development Organisation (DRDO), Directorate General of Ordnance Factories (DGOF) and other Defence departments for 2018-19.
The allocation at BE for 2017-18 was Rs 86,488.01 crore, which remained same at revised estimates (RE) stage. The difference between BE 2018-19 and BE 2017-18 is Rs 7,494.12 crore.
The Committee said it is deeply anguished to note that with each year, the ratio of revenue to capital outlay is skewed in favour of revenue component of the Budget.
However, this skewed ratio of revenue and capital outlay has ominous foreboding for noble intentions and efforts of modernising the Defence Forces.
It recommended that allocations under Capital head need to be augmented suitably for improving the present ratio of Revenue and Capital outlay in favour of Capital head.