STORIES, ANALYSES, EXPERT VIEWS
Amit Cowshish (Ex-Financial Adviser, acquisition, MoD) and Rahul Bedi (Senior Journalist) are critical of India’s half-baked ‘reforms’.
“Other than creating a non-lapsable Defence Modernisation Fund (DMF) financed largely by monetising some 31,550 acres of military land, including 20,000 acres on which Military Farms, founded in 1887, were located and another 8,000 acres occupied by abandoned airstrips and sundry camping grounds, and reducing service salaries and pensions, the Ministry of Defence (MoD) is also focusing on ‘Aatmanirbharta’ or self-reliance by sourcing military equipment locally. But in its misdirected zeal, the MoD fails to realise that such inchoate initiatives, though cursorily appealing in an optics-driven environment, are either unviable, or worse, hugely expensive, or both in the medium term once implemented.
“Initially proposed 17 years ago by the then Finance Minister Jaswant Singh whilst presenting the interim budget for 2014-15, the DMF proposition has recently been resurrected as a magical ‘silver bullet’ to dissemble innumerable flaws and complexities in the MoD’s hidebound procurement procedures….”
The projected DMF, says the authors “is in no manner comparable to a current account to ‘park’ surplus funds for the services to tap into whenever required. The DMF’s proposed quantum, however, is unknown, but according to the 15th Finance Commission’s estimates, it could be around Rs 1,88,000 crore for the five-year period from 2021 to 2026…..” The problem is that “monetising defence land cannot be a lasting solution to bankroll the DMF, as the family silver can only be sold once…..”
Indigenously sourcing defence materiel, writes the authors “though a laudable objective, too needs to be rooted in fiscal reality as it cannot, under any condition, immediately deliver financial dividends and effect savings. The ‘Aatmanirbharta’ mantra is simply another refrain many in the government swear by without adequate data to support their belief that it will imminently usher in financial frugality.
“If anything, indigenous production of military equipment desperately needed by India’s military like helicopters, submarines, combat aircraft, tanks, and even small arms, amongst others, is in the initial years, invariably more expensive than importing it till domestic manufacturing accomplishes amortisation. Domestically, this latter goal is wobbly as India’s military is the sole customer for this kit and the export of major platforms and systems…… remains, for now a mirage.”