Making sense of the data for defence capital acquisition expenditure
In the answer to a question raised in the Lok Sabha, the Union defence minister gave out the following data for capital acquisition allocation & expenditure for the Armed Forces for last three years.
Obviously, the total and the percentages were not given there in the official table for anyone to make sense of the dense data. This blogger put those figures up in the table for easier understanding. But even then, it is not the complete story.
As this blogger had explained earlier [here], the capital acquisition consists of two components: one used to fund committed liabilities for items already procured in previous years; and the other for procuring new items and equipment. For eg., the capital acquisition budget for 2008-09 was earmarked as 37482.77 crore, which included committed liabilities of 17846.57 crore. When the actual capital acquisition budget finally spent in 2008-09 was 30000.42 crore, the expenditure on account of new purchases was only 12153.85 crore against an initial allocation of 19636.2 crore. Thus, the unutilised portion of 7482.35 crore that the government was unable to spend in that year was only from the amount earmarked from new schemes — which comes to 38 percent. 38 percent is the figure to note, and not 20 percent as this data purports to depict.
Similarly in 2009-10, the committed liabilities were for 21248.98 crore and new schemes were budgeted for 19118.74 crore. Thus, the amount that the government was unable to spend in 2009-10 was 1940.72 crore out of 19118.74 crore — more than 10 percent. This happened despite a huge push to spend in the last few weeks of the financial year, as evident from the government’s own Revised Estimates prepared a few weeks before the end of the financial year. The Revised Estimates had envisaged that the government would be able to spend only 13897.9 crore, whereas they ended up actually spending 17178.02 crore due to this last-minute push. It is reflective of the systemic mess that engulfs the complete defence procurement process in this country.
The usual tendency is to blame the politico-bureaucratic lethargy for this mess. But it goes well beyond that simplistic explanation. And it begins with one simple question: Where are the defence economists in this country?