MPs’ panel concerned at Defence fund shortfall

Falling allocation impacting modernisation and tri-service organisations, it says

Updated - March 15, 2020 08:13 am IST

Published - March 14, 2020 08:07 pm IST - NEW DELHI

Chairman of Parliamentary Standing Committee on Defence. File

Chairman of Parliamentary Standing Committee on Defence. File

The Parliamentary Standing Committee on Defence has expressed concern at the widening gap between projections and allocations in the defence budget impacting modernisation and has recommended a dedicated fund for committed liabilities and procurements. The shortfall in allocation has also effected setting up of three tri-service organisations and the operational readiness of the Andaman and Nicobar Command (ANC), the committee noted.

Also read: Budget 2020 | Meagre defence hike threatens military modernisation

“From the information submitted by the Ministry, the Committee notes that since 2015-16, none of the three Services has been given the matching allocation as per the projection.”

The gap in capital allocation for the Army, which was ₹4,596 crore in 2015-16, has increased to ₹17,911.22 crore in 2020-21 (14% to 36%). In case of the Navy, the difference was ₹1,264.89 crore in 2014-15, which has increased to ₹18,580 crore in 2020-21 (5% to 41%) and for the Air Force, the gap of ₹12,505.21 crore in 2015-16 has increased to ₹22,925.38 crore in 2020-21 (27% to 35%).

“The Committee opines that such situation is not conducive for preparation of country to modern-day warfare, where possession of capital intensive modern machines are pre-requisite for not only tilting the result of war in our favour but also having a credible deterrence,” the report stated.

The Committee noted the considerable shortage in the allocation in the Capital Head, which is 35% less than the projection. “The Committee observes that Navy’s fighting capabilities depend on the high value platforms like aircraft carrier, submarines, destroyers and frigate but the allocation of Capital Budget for Navy [percentage-wise] has the sharpest decline.”

Also read: Should military spending be increased?

On the committed liabilities, which are payments anticipated during a financial year for contracts concluded in previous years, the Committee noted that they constitute a significant part of the Capital Head. Inadequate allocation would definitely lead to ‘default situation’ on contractual obligations, the committee said. “Therefore, the Committee has no option but to recommend that a dedicated fund should be earmarked for committed liabilities and new schemes, invariably from next Budget onwards.”

Both the Navy and the IAF have a situation where their committed liabilities are more than their share of the capital allocation in the Budget. To offset this, the Services have been forced to defer payment of committed liabilities of the Defence Public Sector Undertakings (DPSU) among other measures.

In the allocation for Joint Staff, the projection under miscellaneous expenditure was ₹660.94 crore while allotment is ₹294.00 crore and the standing committee was informed that the carry forward burden from previous year is ₹32.14 crore. Hence, the net availability is ₹261.86 crore and the net shortfall is ₹399.08 crore.

“The implications of shortfall in miscellaneous expenditure include inability to operationalisation of Defence Space Agency (DSA), Defence Cyber Agency (DCYA) and Armed Forces Special Operations Division (AFSOD). Other implications are lower operational readiness of Andaman and Nicobar Command (ANC) ships due to impact on annual refit plans, maintenance of SIGINT (Signal Intelligence) equipment and administration of training institutes and operational units.

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