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Air force, navy stare at fund crunch next fiscal

February 11, 2019 05:58 AM


Sudhi Ranjan Sen
Air force, navy stare at fund crunch next fiscal
Money allocated in interim budget not enough to meet liabilities
NEW DELHI: The Indian Navy and the Indian Air Force will not have funds to pay for platforms and equipment they have agreed to buy (or have actually bought) in the past years in the coming financial year 2019-2020, unless the government allocates more money to them.

The Indian Army is better off, but in general the forces face a cash crunch, a senior defence ministry official, who did not want to be named, said.

The official’s assessment, corroborated by analysts and other experts HT spoke to, is based on the capital expenditure allocated to the forces in the interim budget 2019-2020, and their so-called committed liabilities towards capital purchases.

Defence minister Nirmala Sitharaman has already been briefed about this and has taken it up with the finance ministry, this person added.

A defence ministry spokesperson did not respond to a query seeking comment.

All told, the interim budget allocates ~1.03 lakh crore towards the capital expenditure of the three forces.

Of this, the Indian Navy has been allotted ~23,156.43 crore. The committed liabilities for capital acquisition of the Indian Navy is ~25,461 crore, a second senior official dealing with the budget allocation in the ministry of defence said on the condition of anonymity. Committed liabilities are instalments paid annually for ongoing capital projects such as building warships, aircraft, missile systems, etc.

“Either we are allocated more funds later in the year, or we need to cut down on expenditure elsewhere if we have to meet all liabilities that we have agreed on,” a senior naval officer said on the condition of anonymity.

The other option is to roll over the liability, a third defence ministry official said, asking not to be identified. According to Amit Cowshish, the former chief financial adviser to the ministry of defence, “rolling over committed liabilities happens, but is not a healthy practice. Importantly, it reflects poorly on the country.”

The situation isn’t very different for the Indian Air Force which has been allocated ~39,302.64 crore for capital expenditure, but which has committed to paying ~47,413 crore this year, a fourth senior defence ministry official, who did not want to be named, said. Among the big-ticket items IAF is paying for are the Rafale fighters from France.

The army is relatively better off. It has been allocated ~29,447.28 crore. It has a committed liability of ~21,600 crore.

The Indian Army is racing against time to stock up arms and ammunition to be prepared to fight an intense 10-day war. The process received a boost after the terror attack at the army encampment in Uri in 2016

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