The Hindu : Controversial defence deals to come under the scanner

Online edition of India's National Newspaper
Friday, Jul 18, 2003

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Controversial defence deals to come under the scanner

By Sandeep Dikshit

NEW DELHI JULY 17. Several defence-related controversies will come up for closer scrutiny by the Public Accounts Committee of Parliament. These include the upgradation of over 100 MiG-21 aircraft and purchase of missiles at an allegedly inflated cost. The PAC has short-listed the deals from reports of the Comptroller and Accountant General of India tabled in Parliament in 2002 and 2003.

The PAC will examine the over Rs. 2,000-crore project to upgrade over 100 MiG-21 aircraft. The programme has been delayed by over four years while its replacement, the indigenously developed light combat aircraft (LCA), is nowhere in sight.

The PAC is expected to ask the Defence Ministry why such a crucial project was allowed to suffer from all-round delays — in obtaining import licences, development of indigenous avionics and transfer of technology — even though an adequate forecast was made by the IAF which had anticipated the need for MiG-21 upgradation for quite some time. The Air Headquarters had also cautioned that if the total technical life of the aircraft was not extended the entire programme would become infructous. However, even a study on this subject was delayed leading to the project suffering a further "time overrun".

The PAC will also take up the "unnecessary procurement" of missiles for the Kargil operations. The rates contracted were way over what was paid in 1996 for similar missiles. Besides, the missiles were delivered two months after the contracted date and by then hostilities in the Kargil sector had become history. As Government officials failed to insert a provision for liquidated damages in the contract, the company could not be compelled to pay for delaying the order.

With George Fernandes as Defence Minister, South Block has begun the trend of contesting some of the conclusions arrived at by the CAG. One such case relates to the Rs. 1,000-crore deal for special purpose helicopters. The CAG noted that the contract for nine choppers from a Russian company was finalised without evaluating vital systems and the prescribed procurement procedure was violated. The price was "negotiated perfunctorily" even though the quoted price was far higher than the estimated cost. The Defence Ministry reacted through a press note by asserting that all the observations were misplaced. The PAC has decided to look into the CAG's contention and the Defence Ministry's counter-claim in this respect.

Of the 35 defence-specific subjects to be taken up by the PAC, only the Navy would suffer the ignominy of having an entire report examined. However, there was no hostility between the CAG and the Navy as was the case when the auditor examined several `Kargil' purchases, the officials are at pains to suggest. Several inconsistencies in the inventory management programme were noted by the CAG but it also appreciated the constraints faced by the navy. The CAG also suggested remedial measures and the Navy replied in the same spirit by accepting most of them except those pertaining to organisational issues.

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