government "saved" public money, BJP on Rafale deal

[commander jain]

NEW DELHI: The government may have not made a final announcement on the Rafale deal yet but for the BJP it has been "finalised" and the Modi government has saved over Rs 21,000 in the "re-negotiation" with the French government.

"The deal to buy 36 state of the art Rafale aircraft from France at 12 billion dollar (Rs 80000 crore) was re-negotiated and finalised at 8.8 billion dollar (Around Rs 59000 cr)," a tweet by the BJP said.

The government "saved" public money and the deal resulted in gain of "technological knowledge" and "strengthening the air power to defend the border", it said.

Officially, the negotiation between India and France are at an advanced stage.

Minister of State for Defence Rao Inderjit Singh had said yesterday that the two countries had resolved most of the "hitches" in the multi-billion Euro Rafale deal and the remaining issues will be cleared in the next DAC meet, scheduled to be held tomorrow.

Air Force Chief Air Chief Marshal Arup Raha had said, "It (deal) is at a very advanced stage."

http://www.indiandaily.in/government-saved-public-money-bjp-rafale-deal/

 

[ayesha.a]

This reminds me of a joke I read in "Tinkle" magazine a long time ago:

A man and his son are walking home. The man signals a transport bus to stop, and asks the conductor how much it would cost for him and his son to travel home. The bus conductor says five rupees. The man says that is too expensive, and decides to keep walking. Then he signals an auto rikshaw, and asks the price. The auto rickshaw driver says it would cost him 15 rupees. The man says that is too pricey, and keeps walking. Then he calls a taxicab, and asks the same question. The taxi driver says it would cost him 30 rupees. The man says he could never afford that, and decides to walk home on foot.

His puzzled son asks him why he asked the auto rickshaw and taxi drivers for the cost, when he already knew that the bus ticket was too expensive, and auto rickshaw and taxi charges were bound to be even more expensive.

The father proudly replies, "You see my son, if we had decided only to decline the bus service, we would only have saved 5 rupees as a result. But now that we declined the auto rickshaw and taxicab, we have saved another 15 and 30 rupees more today!"

***********************************

In this case, the govt is claiming to have "brought down" the cost from a figure that Dassault probably never even asked for. The competition started of as 126 jets for 12 billion dollars, and the govt is now taking credit for not paying the same 12 billion for 36 jets. They can also take credit for not purchasing 36 jets for 30 billion dollars, and claim to have saved 22 billion dollars - like the man in the joke above.

 

[AugenBlick]

This reminds me of a joke I read in "Tinkle" magazine a long time ago:

A man and his son are walking home. The man signals a transport bus to stop, and asks the conductor how much it would cost for him and his son to travel home. The bus conductor says five rupees. The man says that is too expensive, and decides to keep walking. Then he signals an auto rikshaw, and asks the price. The auto rickshaw driver says it would cost him 15 rupees. The man says that is too pricey, and keeps walking. Then he calls a taxicab, and asks the same question. The taxi driver says it would cost him 30 rupees. The man says he could never afford that, and decides to walk home on foot.

His puzzled son asks him why he asked the auto rickshaw and taxi drivers for the cost, when he already knew that the bus ticket was too expensive, and auto rickshaw and taxi charges were bound to be even more expensive.

The father proudly replies, "You see my son, if we had decided only to decline the bus service, we would only have saved 5 rupees as a result. But now that we declined the auto rickshaw and taxicab, we have saved another 15 and 30 rupees more today!"

***********************************

In this case, the govt is claiming to have "brought down" the cost from a figure that Dassault probably never even asked for. The competition started of as 126 jets for 12 billion dollars, and the govt is now taking credit for not paying the same 12 billion for 36 jets. They can also take credit for not purchasing 36 jets for 30 billion dollars, and claim to have saved 22 billion dollars - like the man in the joke above.

While I don't agree with your assertion(that money was saved due to quantity being dropped from 126 to 36), I will agree that they did not really save money. Negotiations usually do end up somewhere in the middle. This would have happened regardless of govt.(still full points for BJP for actually closing the deal unlike Antony )
The reason is of Increased offsets and tech deals that have been extensively detailed in the dedicated Rafael thread. This is not just the 36 planes.

 

[ayesha.a]

While I don't agree with your assertion(that money was saved due to quantity being dropped from 126 to 36),
...

I didn't say that at all. If that was the case, 12 billion for 126 jets would have become 3.4 billion for 36, plus a little more due to less economy of scale.

The point is that this story of "Dassault asked for 12, but we brought it down to 8" is hard to believe, and is only coming from the Indian side. Dassault is not going "Our product is priced at 12 billion, but those damned Indian negotiators were so brilliant and talented, that they brought it down to 8!"

No amount of talent of the govt negotiators would bring down price by 33%, unless the price was overinflated in the first place.

PS: I'm not saying the deal is a bad one - unless we know the details of what it entails, we cannot judge. I'm only saying, that quoting a fictitious price and subtracting the agreed price from it, and claiming the difference to be money saved by the govt, is a little disingenous.

 

[AugenBlick]

No amount of talent of the govt negotiators would bring down price by 33%, unless the price was overinflated in the first place.

Exactly. That's what I said that BJP can only claim finally ending that MMRCA slow motion circus.
I am just against dividing the total deal cost by number of plains. That's all.

 

[ayesha.a]

Exactly. That's what I said that BJP can only claim finally ending that MMRCA slow motion circus.
I am just against dividing the total deal cost by number of plains. That's all.

I added a postscript above, that I'm not talking about the reasonableness of the price itself. Just bemused at the govt's claim that they saved 4 billion dollars.

 

[DesiGuy1403]

I added a postscript above, that I'm not talking about the reasonableness of the price itself. Just bemused at the govt's claim that they saved 4 billion dollars.

Your loooooong joke was an ample indicator to the contrary.

As a member of a defence forum with access to the right material your analysis should have been more objective.
Instead the looooooong joke sort of bemused the rest of us.

 

[dadeechi]

BJP saving money on this deal is debatable but UPA wasting money in this case is unquestionable. Note that the technical evaluations were completed by Dec-2010. Had this deal been closed in 2011, India would have completed majority of the 126 fighter induction by now.

I will take BJP saving money with a pinch of salt but they deserve full credit for closing the deal that was passed to them on a death bed.

This is no small achievement and deserves a pat on their back.