Not enough funds to cater to ‘Make in India,’ other projects: Senior Army officer tells Parliament panel

The issue of lack of funds for the services has come up at a time when companies like HAL have had to take loans to pay salaries.

Insufficient modernisation funds provided by the Central government have “dashed the Army’s hopes” as they would not be able to cater to their ongoing procurement projects, the then Army vice chief told a parliamentary panel early last year.

The issue of lack of funds for the services has come up at a time when the state-run companies like Hindustan Aeronautics Limited (HAL) have had to take loans to pay salaries to their employees. (PTI/Representative Image)

The issue of lack of funds for the services has come up at a time when the state-run companies like Hindustan Aeronautics Limited (HAL) have had to take loans to pay salaries to their employees.

“Marginal increase in capital in the budget allocation for the Army has dashed all hopes. The fund allocation is barely enough to counter the inflation level, and did not even cater to the effect of the increased tax burden,” the senior Army officer had claimed.

“The fund allocation for the modernisation in 2018-19 was insufficient to cater to committed liabilities, on-going schemes, ‘Make in India’ projects, infrastructural development, policy of strategic partnership of foreign and Indian companies and procurement of arms and ammunition,” says the Standing Committee on Defence, headed by BJP MP and former Cabinet Minister Kalraj Mishra, quoting the then Army vice chief in its report.

The Ministry of Defence, however, said: “It does not agree with the contention of the Vice Chief of Army Staff (VCoAS), contending that there were years when the force had not been able to fully utilise their budget.”

The Committee said that for modernisation, the three services had asked for a projected requirement of ₹1,32,212.34 crore but only ₹86,488.01 crore was allocated last year.

“Under the same head, the projection was for ₹1,72,203.3 crore but the allocation is just ₹93,982.13 crore. Of this, committed liabilities would be to the tune of ₹1,10,043.78 crore. Thus, the budgetary allocation is much less vis-à-vis the committed liabilities,” the panel said.

Committed liabilities are the amount of payments to be made by the defence forces for the acquisitions made by them during the previous financial years for contracts which have already been signed.

The Committee has further said in the report that the representatives of the Navy too detailed the implications of lower allocations of capital budget which would constrain the progress of new schemes and the ability to conclude contracts.

The Committee said the likely delay in induction of critical capabilities, and attendant cost overruns, impact on the progress of infrastructure projects, and mitigation of shortage of accommodation as well would be a general setback to the pace of modernisation of the Indian Navy.

(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.)