Don’t read, study this data

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?


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13 Responses to Don’t read, study this data

  1. .. November 23, 2010 at 11:09 am #

    “well beyond that simplistic explanation. And it begins with one simple question: Where are the defence economists in this country ?”

    Perhaps PE ie ET an alien botanist may be sent home to kala pani if he continues to sponsor inconvenient truths.

  2. sriram November 23, 2010 at 1:38 pm #

    We all know how the bureaucratic wranglings work in our country. I still remember my day in the services(Not very long ago) when to procure a few pencils and sharpeners required a huge volume of paper work, so what makes you think that procurement of capital equipment worth crores of rupees is going to spared the red tape. Add to this the vested interests and the need for cuts and kickbacks at each level, it is not surprising that the armed forces return to the treasury millions of rupees which should actually been used to make India a safer place. But I think given the state of affairs in India and the apathy and callousness of the average Indian towards the security of the nation as well as the functioning of the armed forces, it is no doubt that the military, the bureaucrats and politicians get away with this kind of inefficiency. Pragmatic and all other like minded people may cry themselves hoarse about these issues, but until the average Indian takes it upon himself or herself to question these omissions and commissions nothing is going to change. I had written something about the apathy of the Indian public on my blog( and if we think about all that that is wrong with this country the answer clearly stops at our doorsteps. A point to ponder about!!!

  3. Govind November 23, 2010 at 6:29 pm #

    procurement of pencil was difficult because it fetched very little or no commission.In defence hardware procurement stakes are high and big money in kick backs are involved.Negotiations are not for reducing the price, but for increasing the price so that bigger chunk of kick back for politicians and bureaucrats. Armed forces personnel are kept out of ‘deal’ loop, and few who manage to become part of circus, are clueless on art of handling slush money
    and get caught. Till date no politician or bureaucrat has been caught.

  4. Samy November 26, 2010 at 8:01 am #

    LIC housing scam has proved your point,
    negotiations are not for reducing the price but for increasing the price

  5. Anne December 4, 2010 at 11:16 am #

    Please ask for the Study ordered by the 13th Finance Commission on “Efficient Utilisation if Defence Budget” and why this study not been put on the website like all other studies?

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