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Defence minister can clear deals up to Rs 500 cr

delhi Updated: Jul 14, 2010 02:28 IST

The defence minister's sanction to buy arms and military hardware has been increased five times to Rs 500 crore. The long-pending clearance now allows the minister to spend Rs 500 crore without going through the Cabinet Committee for Security (CCS), as was the case.

The earlier sanction was capped at Rs 100 crore.

For purchases between Rs 500 crore and Rs 1,000 crore, the concurrence of the finance ministry will have to be sought.

The proposed upgrade of the army's more than 200 L-70 anti-aircraft guns, a project that would cost upwards of Rs 300 crore, has been hanging fire for around a decade.

Such projects will no longer require CCS approval. They now fall in Defence Minister AK Antony's domain.

As will routine equipment such as ammunition, battle gear and communication gadgets that soldiers require.

The will give momentum to the modernisation of the armed forces.

Big-ticket acquisitions such as the purchase of fighter jets, warships and artillery guns will still have to be approved by the CCS, though.

South Block sources told HT, CCS approval will be required only for acquisitions of more than Rs 1,000 crore.

This greater financial autonomy will help the defence ministry overcome under-utilisation of funds.

Finance minister Pranab Mukherjee has pegged the defence budget at Rs 1,47,344 crore, including Rs 60,000 crore for modernisation of the forces. But the defence ministry has traditionally surrendered funds. It failed to spend Rs 7,000 crore last year, Rs 7,007 crore in 2008-09 and Rs 3,750 crore in 2007-08.

Mukherjee had mooted the idea that only capital acquisitions of more than Rs 1,000 crore be brought to the CCS.