The Ministry of Defence has set up a committee headed by a senior government official to oversee expenditure of the capital budget earmarked for procurements from the domestic industry in 2022-23 and ensure its full utilisation, News18 has learnt.
The panel was constituted after the defence services spent over 65.5% of capital budget of the previous financial year on indigenous purchases. The total expenditure on domestic procurements was around Rs 74,500 crore while on foreign purchases it was around Rs 39,200 crore. It is learnt the Army spent the highest at 85% of its capital budget on indigenous procurements.
News18 was the first to report on April 9 that the ministry, in 2021-22, has met the set target of spending 64% of the defence capital budget on procurements from the domestic market. This has been largely possible with a spate of indigenous orders placed last month.
According to the order issued on April 8, accessed by News18, the 11-member panel will be headed by Director General (Acquisition) and will comprise the deputy chiefs of the three defence services and other senior officials of the ministry.
The order also said the panel will review the expenditure on domestic procurements every month and will regularly update the Defence Acquisition Council. (DAC). The DAC is headed by defence minister Rajnath Singh and is the defence ministry’s top body to accord approvals for major defence procurements.
But more importantly, the committee will also steer implementation of the defence services’ approved annual acquisition plans and submit quarterly status reports to the DAC and the Defence Planning Board.
The decision to set up a committee was first announced by Rajnath Singh in a post-budget webinar organised in February this year.
Among other announcements, Singh had said a monitoring mechanism under DG-Acquisition would be created, with representatives from all the three Services to monitor the budget earmarked, specifically for private industry and startups, so that it is fully utilised.
Need for Monitoring Acquisition Plans, Budget
The constitution of the panel comes at a time when the government is earmarking increased percentages for capital procurements from the domestic market every financial year in its quest towards full self-reliance in defence.
According to sources, this raises the need for an increased monitoring of defence capital budget expenditure in keeping the forces’ requirements, underlined in their acquisition plans.
For the current financial year, the target has been upped to 68% or Rs 84,597 crore for procurements from the domestic industry from 64% or around Rs 71,400 crore in the previous fiscal. In 2020-21, 58% of the defence capital budget was fixed for the first time for indigenous procurements. It spent 64% of its capital budget on domestic capital procurements that year, following which the target was revised to 64% next year.
Earlier this month, the defence ministry announced that 25% or Rs 21,149.7 crore of the total modernisation funds for 2022-23 earmarked for indigenous procurements will be set aside for purchases from the private sector.
Of this, Rs 1,500 crore will be earmarked for purchases from startups, including those under the Innovations for Defence Excellence (iDEX) scheme to “foster innovation and encourage technology development in Defence”.
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