Considering that the defence capital expenditure already accounts for a very high share in the central government’s overall capital spend, any substantial hike in the former’s share looks less likely. This is more so given the government’s priority to spend on infrastructure and other non-defence capital assets to revive the economic growth.
Amit Cowshish replies: The query is not very clear, but to answer it in broad terms, three specific paragraphs in the Defence Procurement Procedure 2016 have a bearing on the issue of multiple bidding.
Changes in public financial management across the globe have necessitated India to revisit its traditional methods of managing and depicting its public finances. One of the major changes envisaged is a quest to migrate gradually to accrual accounting from the traditional cash-based accounting.
The government seems to have little fiscal space for accommodating the demand of the armed forces for additional funds, given its quantum on the one hand and the state of its revenues on the other which are already quite stressed.
Even if the Fifteenth Finance Commission manages to make a specific recommendation about the funds to be allocated for defence and internal security and the government accepts the recommendation, there can be no guarantee that the actual allocation will not fall short of the accepted level.
It would be nice to see the defence ministry setting up a task force and submitting actionable recommendations which could be considered by the finance minister while deciding the defence outlay next year.
With the latest Union budget keeping the MoD interim allocation unchanged, the MoD has an uphill task in managing its resources and in funding its modernisation programmes.
Implementing the outlined 27 reform measures in four broad areas – Planning, Defence Budget, Acquisition and Make in India – would strengthen defence preparedness and build a credible defence industrial base.
While the purpose of the Fall Clause, a price safety mechanism in rate contracts, is indubitable, some issues concerning its applicability and implications, both for the buyer and the seller, merit a review.
A dynamic offset policy has to include a mechanism for identifying the causes for likely delay or default on the part of vendors in discharging their obligation and removing the impediments faced by them
Additional Allocation for Defence – A Challenging Task for MoF
The government seems to have little fiscal space for accommodating the demand of the armed forces for additional funds, given its quantum on the one hand and the state of its revenues on the other which are already quite stressed.