http://www.defensenews.com/story/de...eciating-rupee-hit-key-iaf-programs/84899486/ Fund Shortage and Depreciating Rupee Hit Key IAF Programs Vivek Raghuvanshi, Defense News , May 25, 2016 NEW DELHI — The Indian Air Force (IAF) faces a severe resource crunch as 11 key defense projects await signing despite their finalization, according to IAF officials speaking on the condition of anonymity. The rising US dollar against the Indian rupee and lower budget allocations by the ruling Narendra Modi government are the main causes of the squeeze, the IAF officials say. There is a shortage of $1.13 billion in the Capital Head account, which is reserved for buying new weapons, and $420 million in the Revenue Head account, which is used to pay for military salaries and day-to-day expenses, including ammunition and stores. The IAF projects that await signing before they can be funded include procurement of 56 new aircraft to replace the aging Avro transporters, 48 medium-lift helicopters, six midair refueling tankers, 20 Hawk advance jet trainers and 38 Pilatus basic trainers. In a first of its kind, Tata Advanced Systems Limited (TASL), a private-sector domestic defense company, and Airbus of France have a deal to manufacture the C-295 transport aircraft that will replace the aging Avro aircraft in a $2 billion program. These are the other purchases and programs that are on hold: Joint production of the Russian Ka 226T Surveillance helicopters Long-range surface-to-air missiles Engines for Jaguar aircraft Electronic warfare suite for the MiG 29 Avionics upgrade for IL-76/78 aircraft The only IAF programs which are likely to be signed this financial year — which runs from April 1 to March 31 — are two additional airborne warning and control systems (AWACS) from Israel and a replacement of the C-130 that crashed. Military officials and analysts here say there is greater need than ever for increasing combat readiness. "The threat for India has not shown any sign of diminishing, in fact, we can see that China has reportedly been reorganizing its command and control elements. It has elevated its Tibet Military Command under direct control of the Peoples Liberation Army (PLA). This would ensure faster allocation and induction of additional specialized forces by China and ensure surprise action/response which would require credible response from the Indian side," said Daljit Singh, defense analyst and retired IAF air marshal. 2016-17 Defense Budget The defense budget for 2016-17 is $37.9 billion (calculated on current exchange rate of 68 rupees to one US dollar) compared to $42.1 billion in 2015-16 (calculated on last year's exchange rate, 60 rupees to the dollar). Similarly Capital Head spending for new weapons for 2016-17 is $11.55 billion at today's exchange rate compared to $14.33 million at last year's exchange rate. Though in rupees defense spending showed a hike of 2.3 percent, in dollar terms, it fell about 10 percent. "Budget planning is a detailed process. It also depends on how much money was spent by IAF against the funds allocated for a two-year period. There is no shortage of funds. Hence the blame must be attributed to IAF commanders and not [Indian] government," said Raman Sopory, president of Defense Consultants Association of India.