Pranab Mukherjee’s defence ministry has projected a shortfall of nearly Rs 7,000 crore despite an unexpected hike in allocations for the armed forces in the Union budget and has said it would be hard put to take up new projects.
This is at a time when the three armed forces have been pushing for clearances of projects that they say are a must.
The navy chief, in particular, has repeatedly expressed concern over the decline in force levels. The navy is pushing for clearance of the Scorpene submarine deal, among other high-value items on its shopping list like maritime surveillance aircraft.
Defence sources said the finance ministry has assured that funds would be made available to the armed forces if required. But that still leaves the armed forces with little freedom to sample international markets for military hardware.
The sources said that with Mukherjee practically ruling out an “omnibus” probe into a series of defence deals struck by his predecessor in the last few months leading to the elections, there was no question of revising the contracts that have been signed.
The defence ministry is all set to ask for additional supplementary provisions in another three months.
The defence allocations by finance minister P. Chidambaram total Rs 77,000 crore, a hike of more than Rs 11,000 crore over the last year’s Rs 65,300 crore.
Defence secretary Ajai Vikram Singh has told the parliamentary standing committee on defence that despite the allocations, the ministry would be left with only Rs 1,000 crore after meeting committed liabilities. This essentially means that the contractual obligations entered into by the previous government when George Fernandes was defence minister was absorbing almost the entire capital expenditure.
The ministry has told the committee that its allocations for 2004-05 appear to be huge but it had actually projected a requirement of Rs 86,457 crore. The ministry said new schemes and projects involving an expenditure of Rs 6,918 crore were close to finalisation. But the budget has not provided for such requirement.
The total capital outlay for the armed forces is Rs 33,400 in the budget. But the forces had projected a requirement of Rs 52,983.31 crore.
Singh said in view of this situation, the ministry would process “cases up to the point where it needs financial approval of the ministry of finance or the cabinet committee on security”.
Over the last year, Fernandes shook off the ennui forced by allegations of corruption in defence deals and pushed through huge contracts to acquire, among other military equipment, the aircraft carrier Gorshkov from Russia, the British Hawk advanced jet trainers and the Israeli Phalcon airborne early warning systems.