What is the issue?
- A Parliamentary standing committee report has highlighted contradiction between actual defence procurements and budget estimates.
- To resolve such claims union Budget 2018 is expected to announce a regulatory body for defence procurement.
How are defence procurements made in India?
- Defence spending is classified under Non-plan expenditure.
- The respective funds will be allocated by the finance ministry through budget estimates.
- Allocated funds will be utilized by
- Defence Research & Development Organisation (DRDO)
- Ordinance factory board (OFB)
- individual tri-defence forces under ministry of defence
- Defence procurements are typically conducted through a competitive two stage bidding process.
- It happens as per the guidelines contained in the Defence Procurement Procedure of India (DPP).
- Apart from this, defence procurement can also be made through inter-governmental agreements between friendly countries.
What are the concerns?
- The report highlights inadequate budget allocations made by the Ministry of Finance (MoF).
- There are perpetual delays in capital acquisitions.
- Also, there is constant miscommunication between the Ministry of Defence (MoD) and the Ministry of Finance (MoF).
- Persistent failure of the defence ministry to utilise the allocated funds has also contributed to reduction in budget allocations.
- Armed forces are sadly under-equipped and procurement planning is grossly inadequate.
- It is concluded that India is not combat ready.
How could a regulator help?
- The shortfalls can be resolved better by an independent regulator for defence acquisitions.
- Implementation of the procurement policy can better be overseen.
- The regulator could check whether the policies are in line with the current and future requirements of the armed forces.
- A regulator could ensure proper acquisition decisions by MoD, MoF, armed forces and Cabinet Committee on Security.
Source: Business Standard
