Budget 2016: 9% Hike in Defence Budget Allocation Likely this Year

Sam Biswas

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India lacks a lot of things but it has one thing plentiful. That is CYNICISM! No where in the world people are so cynical. Perhaps 600 years of Mughal oppression and 200 years British slavery did that to Indians.

You should listen to John F. Kennedy: Ask NOT what your country can do for you; Ask what you can do for the country.
 

sorcerer

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IT IS A VERY ONE SIDED ATTACK YOU AND OTHERS ARE DOING. MODI IS MAKING EVERY EFFORT TO ADVANCE THE COUNTRY DESPITE THE OPPOSITION. INDIA WAS DOING TERRIBLE UNDER GANDHI REGIME. DESPITE ALL THE OPPOSITION AND TECHNICAL PROBLEMS, INDIA HAS ADVANCING FASTER THAN ANY COUNTRY IN THE PLANET UNDER MODI. USA IS EXPECTING A 0.4% GROWTH. IT COULD BE NEGATIVE. YOU HAD NO COMPLAINT AFTER TEN YEARS OF GANDHI REGIME AND YOU ARE NOT EVEN WILLING TO GIVE FIVE YEARS BEFORE YOU START CRITICIZING. IN BUSINESS OR GOVERNMENT IT TAKES TIME TO GET RESULTS FROM ACTION.
:D
Dont take news paper articles personally.

THE ARTICLE SHOWED SOME GOOD CHANGES MODI HAS DONE...HAVE YOU NOT READ THAT.
THE ARTICLE ALSO STATED THINGS THAT NEEDED TO BE DONE.
DONT BE STUPID.I DIDNT WRITE THE ARTICLE..
I WAS JUST COLLECTING ARTICLES FROM DIFFERENT MEDIA OUTLETS ON WHAT THEY EXPECT FOR THE NEW BUDGET.

COOL..RELAX...AND LOOK AROUND THE FORUM WHERE WE ARE DISCUSSING ON A LOT OF PRO DEVELOPMENT MATTERS THIS GOVT HAS DONE..AND YES..DONT FAIL TO CATCH THE PAPPU JOKES.
;)
 

sorcerer

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India lacks a lot of things but it has one thing plentiful. That is CYNICISM! No where in the world people are so cynical. Perhaps 600 years of Mughal oppression and 200 years British slavery did that to Indians.

You should listen to John F. Kennedy: Ask NOT what your country can do for you; Ask what you can do for the country.
There is also a saying "Look and read before you shoot off emosnal drama by hyperventilating on the forum"
Btw..Welcome to DFI..Look...Read ...proceed.
 

Blackwater

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9% increase in defense budget in India has no meaning or significance . until we have safari suit wale babus and tender system:biggrin2::biggrin2::biggrin2:
 

kr9

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I hope this 9% hike will be used for the soldiers and their equipment.

I am not sure if OROP is part of the defence expenditure (since it is a pension plan), but it was estimated to be around 10,000+ crore per year expenditure. Maybe that is why they have given the hike. (I hope it is not so and that OROP will have its own allocation)

We will have to wait and see.
 

sorcerer

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Here's How Manohar Parrikar Managed to Find Over Rs 20,000 Crore in Unused Defence Funds

Defence Minister Manohar Parrikar revealed on Friday that he had found $3 billion (around Rs 20,169.75 crore) which was lying forgotten in a US account. Parrikar said that he had discovered India was paying the US Department of Defence (Pentagon) for new weapons despite $3 billion which had been paid earlier was lying in an account in Washington, according to a report by Business Standard.

The money had been placed in the account managed by the US Defence department for weaponry it was going to buy through the Foreign Military Sales (FMS) programme. This account is used by the department to procure equipment on behalf of foreign government from US-based vendors such as Lockheed Martin and Boeing.

Parrikar in the report said that due to ill-management, or lack of attention to this account, the country had slightly less than $3 billion which is piled up in the account and has not been earning interest. He added that he saved money from this year's capital budget as he had drawn on this account.

The account had come down to $1.7-1.8 billion (Rs 11,429.5 crore - Rs 12,101.9 crore) from somewhere near $3 billion, he further added. This he said must have been as they had paid nearly Rs 6,000 crore from the fund for our committed liabilities. He added that they must have saved almost $700-800 million (Rs 4,706.3 crore - Rs 5,378.6 crore) in foreign exchange.

Parrikar said that he had saved up to Rs 3,000 crore by tightening up payment norms to Indian vendors, which include defence public sector undertakings (DPSUs), he said in the report. Payments had been made even to companies that had failed to deliver the contracted equipment, he added.
India's Defence Ministry is strictly monitoring the staged payment clauses, according to contracts. Parrikar said that they are not allowing it to be loosely paid, even to DPSUs.

The revised allocations have been brought down to Rs 65,808 crore, from this year's allocation of Rs 77,798 crore for capital expenditure. The report added that even if Parrikar saved Rs 9,000 crore, it still leaves Rs 3,000 crore unspent.

The coming year's capital budget for three services amounts to Rs 70,380 crore. He had stated that this provides Rs 10,000 crore – Rs 12,000 crore for new purchases, with the balance pre-committed to instalments on procurements concluded in earlier years.

He further said in the report that since new contracts require an up-front payment of no more than 10-15%, this amount adequately provided for the Rafale contract, expenditures on the mountain strike corps and an estimated Rs 1 lakh crore worth of new contracts which are expected to be concluded by the end of the coming year.

However, this claim does not add up as the Rafale deal which is priced at a minimum of Rs 63,000 crore, the new contracts add up to at least Rs 1.63 lakh crore, for which the advance required is between Rs 16,300 crore to Rs 24,450 crore said the Business Standard report.


Parrikar also said that government has instituted a new way of tabulating the defence budget, which would reflect several expenditures that have so far been kept invisible.

This new methodology includes for the first time defence pensions and allocations to the Ministry of Defence. This amounts to 17.23% of the overall government expenditure, he said.

Source>>
 

sorcerer

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Budget FY17; A Different Beginning

Manohar Parrikar Revenue expenditure has increased by nearly R20,000 crore because of obvious reasons like 7th Pay Commission liabilities, etc. (PTI)
Allocations for national defence (Defence Budget), as part of Union Budget FY17, were pegged at Rs 2,49,099 crore—a marginal increase of less than 1.2% from last year’s Budget estimates (Rs 2,46,727 crore), but a modest increase of 9.8% from revised estimates (Rs 2,24,636 crore). Revenue expenditure rose from revised Rs 1,43,236 crore (against estimates of Rs 1,52,139 crore in FY16) to Rs 1,62,759 crore. Capital expenditure, estimated at Rs 94,588 crore last year, which was revised at Rs 81,400 crore, got a meagre increase to touch Rs 86,340 crore this year.

A preliminary comparison between this year’s Budget estimates with last year’s revised estimates (last year’s revised estimates could have a further increase or decrease, depending on accounted spending, which will be reflected in the next Budget as ‘actuals’) is mere indicative, but a trend analysis of last 10 years suggests fluctuating assessments on resources allocations. For example, revenue expenses have grown at an expected pace of about 11% per annum, but capital expenses have grown exponentially for the very simple reason that massive purchase orders of military equipment have been placed for modernisation purposes in the past few years. Revenue expenditure has increased by nearly R20,000 crore because of obvious reasons like 7th Pay Commission liabilities, etc.

This year’s Defence Budget must have surprised everybody with a lot of heartburn for armed forces, military equipment suppliers and major stakeholders. Unlike a definitive statement from the finance minister on the floor of Parliament on national defence, it has not found its location in nine stated national priorities this time. Neither has it pleased its major stakeholder—the armed forces—on aspirations of meeting capital requirements. If this is not enough, it has certainly disappointed on the R&D front as the DRDO is likely to receive less that it would have otherwise aspired. On the face of it, the Defence Budget has enough reasons for surface-level disappointment.

However, let’s look at another side, which is slowly evolving and whose implications may be far and wide in coming times. A set of four pointers is placed here for further debate.

First, defence minister Manohar Parrikar made a statement on the floor of Parliament that if pension is included in the Defence Budget, the total will account for 2.2% of GDP. Exclusion of pensions and miscellaneous expenses from Defence Budget were a part of traditional method of accounting, which pegged the Budget in a ‘narrow’ range so that the Budget would always be shown deficient despite increased allocations. Parrikar, in a single stroke, exposed inconsistencies in defence budgeting.

Second, less allocation on capital expenditure (a meagre increase from previous year’s revised estimates) is indicative of a different approach by the current government. Parrikar has not only admonished his armed force of being ‘erratic buyers’, but also instructed them to be reasonably tightened. He has argued on the floor of Parliament and elsewhere that armed forces must re-evaluate their demands and priorities. His leadership, despite private murmurs, seems absolute through such assertions.

Third, Parrikar seems to be rightfully hell-bent on reducing the defence import bill, which will slash India’s disproportionate arms import dependency. His statement on the floor of Parliament that the ministry of defence has been able to reduce import bill by R1,000 crore (from R35,000 crore in 2014-15 to R34,000 crore in 2015-16) may serve as small yet important step in this direction. His decision to remove the chief of DRDO and bifurcating multiple roles, consistent strong reminders to defence PSUs and ordnance factories are important indicators of his larger intent of bringing in substantive reforms within state-owned organisational structures.

Fourth, Parrikar argues that industrial substitution will reduce unnecessary bills. He has already stated that production and supply of fighter aircraft could be undertaken under the ‘Make in India’ project. His approved projects have a dominant indigenous component. He has instructed his forces to re-evaluate procurement proposals with an emphasis on indigenous designs. He has stated on the floor of Parliament that such efforts will save money for the country. Of course, such assertions must be translated into facts to be argued further.

This unique Defence Budget is going to be a defining one for the very simple reason that it has put brakes on conventional aspirations. It has, for the first time in the history of defence budgetary calculations, questioned the method, strived to rationalise allocations and put forth a tentative model for import substitution. In the process, it strives to put in place a relatively better transparent procurement procedure. As the next Defence Procurement Procedure (DPP) is round the corner, most aspects of Indian Defence Budget will find answers to queries raised, at least on capital acquisitions.

Parrikar, it may be right or wrong, will be judged by history for his deeds in the Indian defence sector.


The author is with Indicia Research & Advisory, Society for the Study of Peace and Conflict, New Delhi
 

sorcerer

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DPP 2016 Intends to Promote Self-Reliance in Defence

Defence Procurement Procedure (DPP) 2016, which is under final stages of completion, to bring in effective measures to promote indigenization in defence.

To bring down reliance on imports in the defence sector, Ministry of Defence is coming up with a new Defence Procurement Procedure (DPP) 2016, which is currently being finalised.
An official information in this regard was given by the Defence Minister Manohar Parrikar in Lok Sabha on Friday.


“The new DPP will bring into effect measures to promote indigenization and self-reliance in defence. Enabling provisions for utilization and consolidation of Design, Development and Manufacturing infrastructure available in the country are included in the proposal,” said the Minister, according to an official release.
The Defence Ministry is also coming up with a futuristic defence offset policy, which is in the ‘draft stage’.

In this regard, the Defence Acquisition Council (DAC) has also approved a set of amendments for offset provisions in order to simplify defence offset processes. The new draft offset guidelines lay focus on targeted offsets by ensuring flexibility for vendors to realise expected outcome at the time of ‘Request for Proposal (RFP)’ itself.

Targets under new offset guidelines include development of a new ecosystem in defence manufacturing and infrastructure for skill development and Transfer of Technology.
According to the Ministry data, DPP has approved a total of 66 capital procurement cases at an estimated cost of Rs.1.98 lakh crore.

While 47 capital procurement contracts worth Rs.64,859.52 crore were approved in 2014-15, 44 such contracts worth Rs.39,955.36 crore were given approval during 2015-16.
However, procurement of defence items from Indian sources witnessed decline in FY 2014-15 compared to FY 2013-14. While the Indian Armed Forces procured items worth Rs.49,531 crore in 2014-15, Rs.55,104 crore was the worth of items procured during 2013-14.

Source>>
 

sorcerer

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Import of Defence Equipment to be Brought Down: Govt


NEW DELHI: Efforts are being made to bring down the import of defence equipment, promoting manufacturing either by Indian manufacturers or foreign companies in the country under Make in India program, the Lok Sabha was informed today.

Replying during Question Hour, Defence Minister Manohar Parrikar said imports that was 52.47 per cent of the total acquisitions (Rs 66,850.30 crore) in 2013-14 was brought down to 38.1 per cent in 2014-15 and is targeted to be brought down to 30 per cent by next two years.

He said defence asset, capital procurements flow from the defence procurement planning process comprising 15-year Long Term Integrated Perspective Plan (LTIPP), five-year Service Capital Acquisition Plan (SCAP) and Annual Acquisition Plan (AAP).

Presently, LTIPP 2012 to 2027 is in vogue, the Minister added. Responding to another question, Mr Parrikar said manufacturing facilities in defence shipyards are working in full capacity and they have supplied orders of Rs 1.5 lakh crore which would take almost 15 years to comply with supply.
On budgetary allocations, the Minister said in 2015-16, defence budget was Rs 6,011.06 crore on revenue head and Rs 6,480.15 crore on capital head that has now been proposed at Rs 6728.05 crore and Rs 6,865.73crore for 2016-17.

Source>>
 

sorcerer

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Defence Ministry’s Progressive Steps


Defence Ministry has been taking very progressive steps for facilitating servicemen, ex-servicemen or their dependents. Here is a list of few progressive steps taken by the Defence Ministry in the recent times.

The interactive portal facilitates Ex-Servicemen or dependents to submit online applications under various welfare schemes. At present, it contains website and workflow software for online submission of Prime Minister Scholarship Scheme (PMSS) for the sons and wards of Ex-Servicemen.
On this occasion the Defence Minister also unveiled the User Manual of the interactive web-portal. The portal, developed by NIC at a cost of Rs. 58.93 lakhs, will later contain workflow software for all the schemes of the Secretariat which will provide complete information about KSB secretariat, its welfare schemes and allied activities.

It will also facilitate submission of applications online for assistance by ESM/War Widows from anywhere, anytime. Besides reducing time for processing of the applications and release of assistance, considerably, it will also facilitate real time tracking of applications by ESM and give them status of their applications by SMSes or Emails.


Ex-Servicemen Contributory Health Scheme:
The Comptroller and Auditor General of India (CAG), in its report on implementation of Ex Servicemen Contributory Health Scheme (ECHS) during the year ending March, 2015 has made observations mainly relating to administration of the scheme by Central Organisation of Ex-Servicemen Contributory Health Scheme (CO, ECHS), functioning of the empanelled hospitals, budgetary and manpower matters, bringing out issues such as overcharging, anomalies in submission of bills and non-adherence to Memorandum of Agreement by empanelled hospitals, short supply of medicines in Polyclinics, non-disposal of expired medicines, diversion of ECHS funds for service personnel hospitals and shortage of manpower in ECHS Polyclinics etc.
Corrective steps taken or being taken to overcome the shortcomings or deficiencies include outsourcing of pharmacy, authorisation of local chemists, enhancement of financial power of Officer in-charge of ECHS polyclinic to obviate the shortage of medicines, processing of medical bills of all 28 Regional Centres on-line as per rules, appropriate use of ECHS funds by the service hospitals, adherence to the terms and conditions of Memorandum of Agreement by the empanelled hospitals, recruitment of the manpower in ECHS polyclinics, de-duplication of ECHS smart cards etc.

Manufacturing of Defence Equipment:
Defence Ministry is also working towards manufacturing defence equipments in India under the ambitious initiative of Make In India launched by Prime Minister Narendra Modi.
Under 'Make in India' programme, the Government proposes to encourage manufacturing of defence equipment in the country through various policy initiatives which, inter-alia, include the following:

Preference to Buy Indian, Buy and Make Indian and Make Indian categories of capital acquisition over 'Buy and Make Global' or 'Buy Global' categories in Defence Procurement Procedure.
Foreign Direct Investment (FDI) Policy under which Foreign Investment upto 49% is allowed through automatic route and above 49% under Government route on case-to-case basis, wherever it is likely to result in access to modern and 'state-of-art' technology in the country. The foreign investment in defence sector is further subject to industrial license under the Industries (Development & Regulation) Act, 1951.

Industrial licencing regime for Indian manufacturers has been liberalised and most of the components or parts or sub-systems have been taken out from the list of defence products requiring Industrial Licence. This has reduced entry barriers for new entrants in this sector, particularly small and medium enterprises.

The initial validity of Industrial Licence has been increased from 3 years to 15 years with a provision to further extend it by 3 years on a case to case basis.

Issues related to level-playing field between Indian vs. foreign manufacturers and public sector vs. private sector have also been addressed. These include Exchange Rate Variation (ERV) protection for Indian vendors, offset obligations in 'Buy (Global)' cases, Excise/ Custom duties on defence equipment, etc.

Offset implementation process has been made flexible by allowing change of Indian Offset Partners (IOPs) and offset components, even in signed contracts. Foreign Original Equipment Manufacturers (OEMs) are now not required to indicate the details of IOPs and products at the time of signing of contracts. Services as an avenue for discharge of offsets, have been re-instated.

Source>>
 

Anaita Shetty

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What about the Budget this year? What should be our expectation and wishlist? I read that the budget this time will be Anti-Rich, mostly focused on black money crack down. What do you'll think?
 

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