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Fund crunch may hit defence projects
Girja Shankar Kaura
Tribune News Service

New Delhi, August 23
Shortage of funds in the budgetary allocation made this year for defence can lead to curtailment or deferment of some of the schemes and projects, which are at various stages of finalisation.

This has been informed by the Ministry of Defence (MoD), to the Parliamentary Standing Committee on Defence which presented its first report in both Houses of Parliament last week.

The ministry informed the committee that the allocation made in the Union Budget was about Rs 6,000 crore short of the projections, which had been made to Finance Minister P. Chidambaram before the presentation of the Budget. The Finance Minister had been given a detailed presentation, listing the priority projects, at South Block a few days before the presentation to the Union Budget.

Defence Secretary Ajai Vikram Singh, in his presentation before the committee, informed that while the MoD had projected a requirement of Rs 86,457 crore to the Ministry of Finance, only Rs 77,000 crore had been allocated. The projection had been made keeping in mind obligatory charges, essential maintenance needs, committed liabilities and prioritised new schemes of the defence services.

In this allocation, Rs 33,483 crore have been kept for capital expenditure, but most of it will go in committed liabilities and will leave just about Rs 1,000 crore for prioritised new schemes and projects.

In the projection made before the Finance Minister, the Defence Ministry had sought Rs 6,918 crore for the new projects and schemes, which were at various stages of finalisation. But since the allocation would leave just about Rs 1,000 crore in surplus after committed liabilities, some schemes and projects involving capital expenditure could either get delayed or deferred.

However, this situation would arise only if the Ministry of Finance did not release additional funds, which would be required by the MoD.

The committee, in its verdict, expressed concern that not only the amount available with the MoD on account of capital expenditure after adjusting the committed liabilities was hardly adequate for taking up any new projects or schemes, several schemes and projects, at various stages of finalisation, would have to be deferred.

It recommended that the ministry assess the situation in the light of the likely impact of reduced allocations on the new schemes and ongoing acquisition proposals and approach the Ministry of Finance for supplementary allocation to ensure that modernisation plans and procurement of essential equipment was not delayed.

The committee also reiterated the need for the government to set up an aerospace command to tap the potential of space technology in a futuristic war scenario. It said the development of an aerospace command must be examined expeditiously and concrete steps be taken by the Air Headquarters to set it up.

The committee also suggested that India go in for export of missiles to fill the idle capacity of the country’s defence bluechip PSU Bharat Dynamics Limited.

Expressing dismay at what it described as abrupt reversal of the NDA government’s decision to set up a three-year revolving non-lapsable fund, the committee asked the new government to set up a defence modernisation fund with committed allocation for five years.

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