India says budget cuts won'tdelay Rafale talks

[indian_foxhound]

The government pledged on
Wednesday not to let defence cuts
disrupt efforts to finalize a potential $10
billion purchase of French warplanes,
but both sides played down
expectations of a landmark deal in time for a visit by French President Francois
Hollande next week. India picked the Rafale combat jet, made by
Dassault Aviation ( AVMD.PA ), for exclusive negotiations over a year ago after a hotly
contested bidding war with rival manufacturers,
but is still to finalize the 126-aircraft deal. "The Rafale purchase is being reviewed by a cost
negotiation committee," Defence Minister A.K.
Antony told reporters. "There are six to seven layers of procedure after
that. We cannot cut short the procedure," Antony
said at an air show in Bangalore. "There is no question of delay because of the
budget cuts." In Paris, officials said the complex negotiations
were going smoothly but ruled out a signature
during a visit to India by Hollande on February
14-15. "Things are moving quite quickly. We hope the
contract can be concluded as soon as possible but
it won't be during the visit," said a French
diplomatic source who declined to be named. "India never signs military contracts during
political visits, but above all, the contract is not
ready yet." India, the world's biggest arms importer in recent
years, plans to spend around $100 billion over
the next 10 years in upgrading its mostly Soviet-
era military hardware to keep pace with China's
ramping up of defence spending. Despite the modernization push, India's defence
budget will not escape a tightening of
government spending this year, Antony said, as
New Delhi looks to rein in its fiscal deficit. (Reporting by Anurag Kotoky and
Ananthalakshmi Ananthsankar in Bangalore and
Elizabeth Pineau in Paris; Writing by Henry Foy;
Editing by Tim Hepher)

http://in.reuters.com/article/2013/02/06/india-airshow-rafale-jets-antony-idINDEE91506820130206

 

[Abingdonboy]

Any idiot with more than half a brain could've told you this! How can a budget cut of <$2BN USD for the Defence budget 2012-13 affect the MMRCA? That too once the FinM has stated again and again that the funds are all there- no problems?


The stupid, ignorant "desi" media are so out of their depth when it comes to defence matter (and others) it is a joke! What no one seems to understand is that this cut is only a short-term one-off issue affecting specifically the FY2012-13 and has NO,ZERO,ZILCH baring on the future acquisitions budget or any major deals. No major deals are put in jeopardy and the worst case scenario is that 1 or 2 deals are made to wait a few weeks to be signed. Because what happens immediately after the FY 2012-13 comes to an end? A brand new FY begins!! The Defence budget of 2013-14 will follow the trend of all defence budgets of the last 7 or so years and will increase close to, if not, double digits percentage points. The increase in the 2013-14 defence budget will more than offset this modest cut of the 2012-12 budget.


Also some people don't seem to understand that the entire price of defnce procurements are not paid for upfront but in installments over years so a $2BN cut will have an even lesser impact on procurement.

 

[OrionHunter]

'won't delay Rafale talks'??? We're still just talking??? Jeeez!

 

[Abingdonboy]

'won't delay Rafale talks'??? We're still just talking??? Jeeez!

Of course! If there wasn't still talking the deal would ever have fallen through or it would have been signed! What else did you think was going on? The MoD was just sitting around till a nice day to announce/sign the deal??!! LOLZ

 

[hellboy007]

WE fanboyzz open pdf everyday and expect something new and major but we forget one thing that defense related projects takes time. After every few days there are speculations that the deal is going off, which is sometimes hilarious other times outright irritating.

 

[Abingdonboy]

WE fanboyzz open pdf everyday and expect something new and major but we forget one thing that defense related projects takes time. After every few days there are speculations that the deal is going off, which is sometimes hilarious other times outright irritating.

100% true sir!! Got it in one lol!

 

[illusion8]

Any idiot with more than half a brain could've told you this! How can a budget cut of <$2BN USD for the Defence budget 2012-13 affect the MMRCA? That too once the FinM has stated again and again that the funds are all there- no problems?


The stupid, ignorant "desi" media are so out of their depth when it comes to defence matter (and others) it is a joke! What no one seems to understand is that this cut is only a short-term one-off issue affecting specifically the FY2012-13 and has NO,ZERO,ZILCH baring on the future acquisitions budget or any major deals. No major deals are put in jeopardy and the worst case scenario is that 1 or 2 deals are made to wait a few weeks to be signed. Because what happens immediately after the FY 2012-13 comes to an end? A brand new FY begins!! The Defence budget of 2013-14 will follow the trend of all defence budgets of the last 7 or so years and will increase close to, if not, double digits percentage points. The increase in the 2013-14 defence budget will more than offset this modest cut of the 2012-12 budget.


Also some people don't seem to understand that the entire price of defnce procurements are not paid for upfront but in installments over years so a $2BN cut will have an even lesser impact on procurement.

It's the Fin Min's brilliant plan to bring down the fiscal deficit for '12/'13 by cutting the def budget , while he ignored something like the 1800 crores spent by Mrs Patil on her and her family's and relatives useless foreign jaunts.

 

[JanjaWeed]

Are we still in the talking stage? I thought it's only the signing of the agreement which is pending...

 

[Abingdonboy]

Are we still in the talking stage? I thought it's only the signing of the agreement which is pending...

Talks are still on, there won't be much delay between end of talks and signing of contract. Why would the signing be pending for so long mate? There is A LOT of things to talk about and get sorted.

It's the Fin Min's brilliant plan to bring down the fiscal deficit for '12/'13 by cutting the def budget , while he ignored something like the 1800 crores spent by Mrs Patil on her and her family's and relatives useless foreign jaunts.

It is what it is mate- shyt happens, right! In the long run- who cares?

 

[Bobby]

we need Rafale.......dont even think of it

 

[JanjaWeed]

Talks are still on, there won't be much delay between end of talks and signing of contract. Why would the signing be pending for so long mate? There is A LOT of things to talk about and get sorted.

The way to get started is to quit talking and begin doing. Been a while since they gave the nod.. & talking should have been over by now. Again... we are talking about Indian bureaucracy. Nothing surprises me...

 

[anant_s]

It is a standard practice in all govt departments that they submit their yearly spending records especially the capital budget. Now at the end of year if a department fails to submit plans of spending some part of budget, it is de-allocated. Now by this method, govt can actually show reduction in spending and the fund can be diverted somewhere else. As spending reduces, the amount government has to borrow for its expenditure reduces. This way government can actually reduce the deficit and meet the target set at the begining of year.
We all are aware that GDP deficit was a big area of concern by rating agencies (S&P etc) while they threatened downgrading of India's economic rating.
Now in larger scheme of things USD 2 billion won't look big (considering India's GDP), but by pooling in the unspent money by various departments and ministries, substantial savings can be generated. FM is only playing a role of a typical middle class Housewife (no offense meant) and nothing more should be read into the funds recall (i don't like the word CUTS used here).
Indian print media (atleast papers like TOI) are making a big issue out of it, but even casual observers like us would understand, that Big ticket purchases like Rafale won't get affected.

 

[Abingdonboy]

The way to get started is to quit talking and begin doing. Been a while since they gave the nod.. & talking should have been over by now. Again... we are talking about Indian bureaucracy. Nothing surprises me...

In this case talking IS doing!! Or to put it another way- negotiating. This is the only way you can hash out such a complex deal. And in this case I wouln't blame the bureaucracy really.

It is a standard practice in all govt departmens that they submit their yearly spending records espcially the capital budget. Now at the end of year a department fails to submit plans of spending some part of budget, it is de-allocated. Now by this method, govt can actually show reduction in spends and the fund can be diverted somewhere else. As spending reduces, the amount government has to borrow for its expenditure reduces. This way government can actually reduce the deficit and meet the target set at the begining of year.
We all are aware that GDP deficit was a big area of concern by rating agencies (S&P etc) while they threatened downgrading of India's economic rating.
Now in larger scheme of things USD 2 billion won't look big (considering India's GDP), but by pooling in the unspent money by various departments and ministries, substantial savings can be generated. FM is only playing a role of a typical middle class Housewife (no offense meant) and nothing more should be read into the funds recall (i don't like the word CUTS used here).
Indian print media (atleast papers like TOI) are making a big issue out of it, but even casual observers like us would understand, that Big ticket purchases like Rafale won't get affected.

Superb post sir!

 

[anant_s]

Any idiot with more than half a brain could've told you this! How can a budget cut of <$2BN USD for the Defence budget 2012-13 affect the MMRCA? That too once the FinM has stated again and again that the funds are all there- no problems?


The stupid, ignorant "desi" media are so out of their depth when it comes to defence matter (and others) it is a joke! What no one seems to understand is that this cut is only a short-term one-off issue affecting specifically the FY2012-13 and has NO,ZERO,ZILCH baring on the future acquisitions budget or any major deals. No major deals are put in jeopardy and the worst case scenario is that 1 or 2 deals are made to wait a few weeks to be signed. Because what happens immediately after the FY 2012-13 comes to an end? A brand new FY begins!! The Defence budget of 2013-14 will follow the trend of all defence budgets of the last 7 or so years and will increase close to, if not, double digits percentage points. The increase in the 2013-14 defence budget will more than offset this modest cut of the 2012-12 budget.


Also some people don't seem to understand that the entire price of defnce procurements are not paid for upfront but in installments over years so a $2BN cut will have an even lesser impact on procurement.

Sir, a simple fact that nobody is willing to look at is: RAFALE deal is yet to be signed. Initially when order is placed to Dassault, some advacnce amount would be paid. Progressive payments would then be made upon delivery of fighters (pro-rata basis) and subsequnt setting of infra-structure at HAL for domestic production. Even if this deal is in range of USD 20 billion, government doesn't have to pay the money at one go and the whole payment would be spread out over entire production period which could well be 6-8 years from now working out on an average payment of 3-4 billion USD per year at todays cost.
In this period economies as usual would complete one more cycle of boom and crash but as you said our self appointed media economic experts will keep uttering nonsense.
I heard similar noises when preliminary design agreement was signed with Russia over FGFA. The amount involved was around USD 270-300 million, but our enlightened media hyped by stating that USD 30 billion deal is signed (the approximate estimated value including R&D costs for 250 odd fighters). God save us from these experts

 

[Koovie]

Just wait for next week.....fingers crossed