Rs 37,000 Crore of Defence Ministry’s Modernization Budget Remains Underutilized

[mkb95]

Latest expenditure data with ET show that over Rs 37,000 crore of the defence ministrys modernisation budget remains unutilised as of December-end

NEW DELHI: Even though several major defence purchases are in their advanced stages, the defence ministry is struggling to exhaust its modernisation funds with almost 40% of the capital budget unspent as the financial year enters its last quarter.

Latest expenditure data with ET show that over Rs 37,000 crore of the defence ministry's modernisation budget remains unutilised as of December-end, with the Army struggling the most, having spent only 45% of its capital allocation. In 2014-15 too, the ministry could not spend 22% of the initially allocatedRs 80,545-crore capital budget for the three armed forces.

Eventually, the balance Rs 18,200 crore under the capital head was used mainly for revenue expenses. Of the three forces, the army seems to be the laggard, having failed to exhaust half its modernisation budget.

The ministry now faces a situation where a part of its funds earmarked for new purchases and upgrades are likely to be shifted either to the revenue head or returned to the central kitty, in what would be a dent to modernisation efforts.

Official spending numbers obtained by ET indicate that the defence ministry could fall short of its target of signing deals worth over Rs 1 lakh crore. The air force has been able to spend funds at a good pace, with 73% of its Rs 33,657-crore capital budget exhausted. DRDO, meanwhile, has spent 64% of its Rs 7,788-crore allocation. Officials believe the air force may end up overshooting its budget and could pull in funds earmarked for the army and navy.

With several major projects stuck — the M777 howitzer purchase and selfpropelled howitzers, for example — the army is at the bottom of the spending list. Only 45% of its Rs 27,227-crore capital budget has been exhausted till the end of December. The Navy fares slightly better, having spent 57% of its Rs 25,003-crore allocation.

The numbers also reflect an increasing concern on the part of the private sector over the government's ability to go ahead with major 'Make in India' projects that require firm orders.

While there have been several policy changes which have been welcomed by the industry, the lack of substantial orders has been a spoiler.

 

[illusion8]

@Abingdonboy @Nilgiri

This is the scenario year on year, 30-40% of defense budget goes unspent every year, the confusing part is the complete lack of coordination between the service brass, the R&D labs and the MOD.

 

[PARIKRAMA]

Now you know from where India can pay 50% advance for a rafale deal versus 15% needed for signing amount. Its actually not unused but rather earmarked for certain acquisitions procurement. For example
For IAF 73% of its Rs 33,657-crore capital budget exhausted implying Rs 9087 Crs available or just 1.35 Bn. So it implies, other services where funds are sure to remain unutilized will be pooled to fund sureshot acquisitions.

A total of Rs 37,000 Crs means around USD 5.5 Bn....out of which approx USD ~4.5 is for Rafale...

But yes, i had said earlier to @Abingdonboy about this that year after year our unutilized portion creates a backlog in next financial year as it increases first the stress for creating adequate liquidity for capex and second it impacts our modernization plan timeline..

 

[Ankit Kumar]

5 Billion goes unused , still our army airmen use obsolete Alouttes,still our Navy ships go without ASW helis, still we have flying coffins.
5 Billion us enough to buy 120 Mig29s. It would replace half of our flying coffins.

 

[[Bregs]]

one thing is sure the Indian navy would have exhausted all its budget the way they are cruising along in expansion and modernization of there fleets

 

[Guynextdoor2]

Boot this incompetent government out.

 

[ranjeet]

Boot this incompetent government out.

Kejriwal ko bana de PM?

 

[Guynextdoor2]

Kejriwal ko bana de PM?

Wo to ban hi jayega. I'm about to open a thread called 'who should be next PM'. You can provide your alternative candidates there.

 

[Abingdonboy]

@Abingdonboy @Nilgiri

This is the scenario year on year, 30-40% of defense budget goes unspent every year, the confusing part is the complete lack of coordination between the service brass, the R&D labs and the MOD.

It is absoltuely criminal and I have been banging on about this for as long as I can remember. And the situation is actually even less palatable when examined in detail. Don't forget that a large proportion of these unspent funds would be going on large ticket items (fighter jets, helos, transports etc etc) which all come with pay back periods with the cost of the deals spread out over years and not 100% paid upfront as with small deals. As such $1 USD in unspent CAPEX reutrned to the Fin Min actually has a disproportionate oppurtunity cost. $1BN returned could have paid for a $10BN USD deal (this would be more than enough to fund the IN's 150+ helo needs, or address the IA's entire 20+ year old 5,000+ arty gun requirement, or raise an increidbly capable SOCOM or etc etc etc). And the Indian Military do this EVERY YEAR. The Indian Military's modernisation plans are thus $100s of BNs behind where they could be!


Every year the Indian Military returns billions of unspent CAPEX and yet soldiers are running around with pre-WW2 weapons (BREN and STEN small arms), 40+ year old 3rd generation MiG-21/27s remain in service, 30+ year old Sea Kings remain in service forcing $1BN USD destroyers to sail with empty hangers, 30-40+ year old Cheetak/Cheetah remain in service with all three arms, thin skinned outdated BMP-2s continue to serve as the back bone of the IA's mech forces etc etc

The situation is beyond depressing, it is criminal as I have said.

 

[T90TankGuy]

Babudom ki jai ho.

 

[Ankit Kumar]

It is absoltuely criminal and I have been banging on about this for as long as I can remember. And the situation is actually even less palatable when examined in detail. Don't forget that a large proportion of these unspent funds would be going on large ticket items (fighter jets, helos, transports etc etc) which all come with pay back periods with the cost of the deals spread out over years and not 100% paid upfront as with small deals. As such $1 USD in unspent CAPEX reutrned to the Fin Min actually has a disproportionate oppurtunity cost. $1BN returned could have paid for a $10BN USD deal (this would be more than enough to fund the IN's 150+ helo needs, or address the IA's entire 20+ year old 5,000+ arty gun requirement, or raise an increidbly capable SOCOM or etc etc etc). And the Indian Military do this EVERY YEAR. The Indian Military's modernisation plans are thus $100s of BNs behind where they could be!


Every year the Indian Military returns billions of unspent CAPEX and yet soldiers are running around with pre-WW2 weapons (BREN and STEN small arms), 40+ year old 3rd generation MiG-21/27s remain in service, 30+ year old Sea Kings remain in service forcing $1BN USD destroyers to sail with empty hangers, 30-40+ year old Cheetak/Cheetah remain in service with all three arms, thin skinned outdated BMP-2s continue to serve as the back bone of the IA's mech forces etc etc

The situation is beyond depressing, it is criminal as I have said.

Isn't this amount enough to equip all our front line men with proper night vision goggles, proper boots , proper bullet proof vests , etc?And similar thing happens each year.

This is just .....much more than criminal.
As one person wrote on Twitter, we will keep under utilising funds , and then get a severe blow in next war and then buy basic equipments like guns .
And if 5 Billion out of the total ~40 billion is returned, then its very clear we are spending less than our western neighbour on new acquisitions.
I am again saying, I don't think Parrikar is the right man.need some one like Power Minister, and that too fast.

 

[Abingdonboy]

Isn't this amount enough to equip all our front line men with proper night vision goggles, proper boots , proper bullet proof vests , etc?And similar thing happens each year.

The amount returned just in the last 3 years would have been enough to equip every single frontline/combat solider from this:

(^sadly this is 2016)




To this:

(^the world's best equipped soldier- Australian Army/ADF)

This is just .....much more than criminal.

At the very best it is dereliction of duty and in the Military this would result in a dishonourable discharge and court martial, in the most extreme interpratation it is treason.

 

[MilSpec]

It is absoltuely criminal and I have been banging on about this for as long as I can remember. And the situation is actually even less palatable when examined in detail. Don't forget that a large proportion of these unspent funds would be going on large ticket items (fighter jets, helos, transports etc etc) which all come with pay back periods with the cost of the deals spread out over years and not 100% paid upfront as with small deals. As such $1 USD in unspent CAPEX reutrned to the Fin Min actually has a disproportionate oppurtunity cost. $1BN returned could have paid for a $10BN USD deal (this would be more than enough to fund the IN's 150+ helo needs, or address the IA's entire 20+ year old 5,000+ arty gun requirement, or raise an increidbly capable SOCOM or etc etc etc). And the Indian Military do this EVERY YEAR. The Indian Military's modernisation plans are thus $100s of BNs behind where they could be!


Every year the Indian Military returns billions of unspent CAPEX and yet soldiers are running around with pre-WW2 weapons (BREN and STEN small arms), 40+ year old 3rd generation MiG-21/27s remain in service, 30+ year old Sea Kings remain in service forcing $1BN USD destroyers to sail with empty hangers, 30-40+ year old Cheetak/Cheetah remain in service with all three arms, thin skinned outdated BMP-2s continue to serve as the back bone of the IA's mech forces etc etc

The situation is beyond depressing, it is criminal as I have said.

forget procurement or development, if budget is underutilized, put it in OROP. Alt least use the money, give it to the servicemen.

 

[PARIKRAMA]

I believe the best use be a world class Indian printer for new Delhi..
It should have TOT from a western nation and should also have lower life cycle costs as compared to HP/canon etc

It's primary job is high quality printing of material evidences and it should also bind those papers to make them together as Dossiers.

Perhaps we should place few of these units at strategic locations across the world like USA, France, Germany, UK, Russia, China, Japan etc where they can be printed remotely and finished product as dossier comes out quickly and directly to respective governments.

At least we can utilise some funds better that way.....


Could not stop attempt to troll.. Apologies in advance

 

[Abingdonboy]

I believe the best use be a world class Indian printer for new Delhi..
It should have TOT from a western nation and should also have lower life cycle costs as compared to HP/canon etc

It's primary job is high quality printing of material evidences and it should also bind those papers to make them together as Dossiers.

Perhaps we should place few of these units at strategic locations across the world like USA, France, Germany, UK, Russia, China, Japan etc where they can be printed remotely and finished product as dossier comes out quickly and directly to respective governments.

At least we can utilise some funds better that way.....


Could not stop attempt to troll.. Apologies in advance

You're talking about the MMRCA of printer selection bro, I'm sure those printers can be in Indian service by 2060...