New Delhi: The armed forces are currently working on over 100 emergency procurement contracts — with a ceiling of Rs 500 crore each — in the wake of tensions with China along the Line of Actual Control (LAC).
This procurement could easily eclipse the Rs 11,000 crore worth of contracts inked after the Uri terror attack in 2016, ThePrint has learnt.
Government sources told ThePrint that there will be no shortage of funds for the armed forces, and any additional funds that may be needed will be provided.
The contracts being pursued include those under capital budget. Defence Minister Rajnath Singh had, on 15 July, given the go-ahead with Rs 300 crore worth of capital acquisitions to meet emergent operational requirements.
As reported earlier, the armed forces are on a shopping spree and the Army is in the process of procuring armour-piercing fin-stabilised discarding sabot (APFSDS) ammunition fired by the T-72 and T-90 main battle tanks, additional Heron drones, Man Portable Air Defence System (MANPADS), mines and high altitude clothing, among other things.
Not all contracts are worth Rs 500 crore
Sources said the Army alone is pursuing 100 contracts, both under revenue and capital budget heads.
“These contracts have an upper ceiling of Rs 500 crore. This does not mean that all contracts are for Rs 500 crore. Some could be as less as Rs 25 crore while some would be closer to the ceiling,” a source explained.
Another source said emergency procurement powers extended to the armed forces in June were important, given the tensions with China.
One of the sources cited above said that between January 2014 and October 2016, 17 Army contracts were inked under emergency procurement by the Ministry of Defence, totalling Rs 400 crore.
In October 2016, emergency powers were extended to the services by the Narendra Modi government.
Between October 2016 and December 2016, the Army alone inked contracts worth about Rs 11,000 crore under emergency procurement provisions. These dealt with operational requirements like arms, ammunition, radars and mines, among other things.
Sources said the figures for the Navy and the Air Force were different, but lower than the Army’s.
‘There will be no shortage of funds’
Sources said the forces are currently managing the funds from what was already allocated to them in the Union Budget 2020.
“The funds for the emergency contracts are coming from what has already been given to the defence ministry,” a source said.
But the source added that if the budget is not adequate for making other payments under the normal procurement process, a request for additional funds will be made to the finance ministry around September.
“There will be no shortage of funds for the armed forces,” he asserted.
Laxman Kumar Behera, research fellow at the Manohar Parrikar Institute of Defence Studies and Analyses, said nine times out of 10, the finance ministry turns down the request. “However, this time the defence ministry will most likely get the additional funds that they will seek. The threat from China is real. Last year too, they got an additional Rs 10,000 crore,” he said.
Sunil Kumar Kohli, former Financial Advisor to Defence Services (FADS), who retired in 2018, said the armed forces manage well since the entire payment is not made at once.
“The payments are spread out. Under emergency procurement, the forces do have to make some additional payments up front, and hence, they reprioritise. What also happens is that bottlenecks are removed under emergency procurement,” he said.
Kohli added that the forces have, in the last few years, not surrendered any funds from the capital budget, which shows that a lot of procurement is being done.