Slump hits defence budget

Discussion in 'Defence & Strategic Issues' started by Ganesh2691, Sep 4, 2012.

  1. Ganesh2691

    Ganesh2691 Regular Member

    Mar 4, 2012
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    The slowdown in economy is now forcing the finance ministry to cut down on the defence budget mid-way through the financial year. In several meetings held last week, finance ministry babus have told their counterparts in the defence ministry that there will be ‘no funds’ for big-ticket defence procurement plans if the economy does not improve by September end.

    A few weeks ago the finance ministry shot off a letter to the finance wing of the defence ministry saying if the economy does not improve by the second quarter of the current financial year, there will no funds for big defence deals. If that happens then major defence procurement plans, including the nearly Rs one lakh crore combat aircraft deal in the pipeline with France, will be adversely hit.

    A panic-stricken defence ministry immediately held a meeting with all three service chiefs and asked them to review their procurement plans and demands.

    On August 28, financial advisor to the defence ministry, Priti Mohanty, made a detailed presentation before the vice-chiefs of Army, Navy and the Air Force in the South Block.

    According to senior defence ministry officials, who were part of the meetings, she apprised them about the financial constraints. She asked them to find out how the defence ministry can continue to make procurements with ‘limited resources’.

    The defence minister, AK Antony, is learnt to have been apprised of the outcome of these meetings.

    The defence budget has been hiked by more than 17% to Rs1,93,407 crore for the fiscal year 2012-2013 from last year’s Rs1,64,415 crore. Of the total outlay, over Rs79,500 crore would be spent on procuring modern weapons systems and military hardware.

    According to the sources, though the defence ministry is keen to step up defence modernisation, it would face severe strain on resources which could lead to delay or review of certain big ticket acquisition plans.

    Of the most closely watched military deals in the world is the multi-billion dollar MMRCA (Medium Multi-Role Combat Aircraft) deal, which is currently under commercial negotiations committee with France’s aircraft-makerDassault.

    Signing of the contract for the delivery of 126 Rafale jets for the air force could be delayed. The Rafale will be leading combat plane for next four decades. The initial lot of Rafale fighters will join the Air Force only in 2015-16.

    Another major acquirement of 197 light attack helicopters has also been delayed several times since 2008. The MoD has attributed this delay to the Air Force’s indecisiveness.

    Among other major deals approved this year was the acquisition of 145M777 ultra-light Howitzers from British Aerospace & Engineering Systems.

    The Rs3,000 crore deal was cleared in May this year with the US through the foreign military sale programme. Purchase of 75 Basic Trainer Aircraft from the Swiss firm Pilatus is also on the cards.

    “Under such circumstances, it does not look probable that these deals will be concluded this fiscal. If we do not get enough money in our revised estimate budget, our modernisation programme might suffer a major setback,” said a senior officer of defence ministry.

    Slump hits defence budget |

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