Defence Industry

Vice Chiefs Financial Powers – and the intricacies within
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Issue Net Edition | Date : 12 Nov , 2018

The government has enhanced the financial powers of the Army, Navy and Air Force Vice Chiefs five times; from Rs 100 crore to Rs 500 crore for expediting the decision making process involved in the procurements of the Armed Forces. The MoD statement on the issue states, “The Defence Minister has taken this important decision to augment the arms and ammunition reserves of the armed forces and thus enhance their operational preparedness”.  Posts on social media have described the measure as “good” but in theoretical terms it is much more than mere “good”. In 2007 during the UPA I regime, financial powers of the Army, Navy and Air Force Vice Chiefs were enhanced from Rs 10 Crore to Rs 30 Crore for sanctioning capital acquisition schemes for procurement of equipment and stores. In July 2017 under NDA II, Defence Minister Arun Jaitley had delegated “substantial” financial powers (“at least” Rs 800 cr annually described in media) to the Armed Forces for undertaking works for perimeter security of sensitive military installations. So now the limit of financial powers of Vice Chiefs raised to Rs 500 crore by NDA II theoretically is really good. But what are the intricacies within the system?

The about Rs 800 cr annual delegation of financial powers to Armed Forces for undertaking works for perimeter security of sensitive military installations over limited period was only accorded full 14 months after the government-appointed Philipp Campose Committee instituted post the terrorist attack on the IAF base on January 2, 2016, submitted its report to Defence Minister Manohar Parrikar in May 2016 giving recommendations to bridge glaring voids in security of military camps. Significantly, there was no follow up to the Philipp Campose Committee recommendation of raising and equipping the special DSSC unit, even as scores of CAPF units continue to be sanctioned by MHA. Only after the terrorist attacked Sunjwan Army Camp on February 10, 2018, MoD approved expenditure of Rs 1,487 to boost security of Army camps – possibly due to the flak government faced on social media and after Defence Minister spoke to the Prime Minister Modi on a visit abroad. This was seven months after Jaitley announced “substantial” delegation of financial powers to Vice Chiefs and 21 months after the Phillip Campose Committee submitted its report to Defence Minister Manohar Parrikar. Had terrorists not struck Sunjwan, okaying expenditure for perimeter defence may not have come through. But the beauty still was that no separate allotment made for this purpose.

The media never highlights that the then Defence Minister Arun Jaitley as  permanent Finance Minister had been making annual defence allocations to the Armed Forces that were ‘negative’ in actual terms right from 2014 – a practice that is continuing to date. So what does the fivefold increase in delegation of financial powers for the Service Vice Chiefs mean when there is severe paucity of funds in the kitty? Has the previous Army Vice Chief not exposed the real face of sustenance, leave aside modernization, and how multiple ongoing programs were  forced to shut down – even an important program of Battlefield Management System was forced to foreclosed? Did Parliament’s Standing Committee for Defence not reveal to the nation the pathetic state of equipping of Armed Forces and is this not the reason Major General BC Khanduri was sacked as Chairman of  Parliament’s Standing Committee for Defence; burying the issue quietly and instead talk of imports and ‘Make in India’ etc? There is much debate on bulk of defence budget going towards pay and allowances and replacing manpower with non-existent technology, but the expenses on civilian defence set up and support organizations continues to bloat unchecked. 

For public consumption, the delegation of financial powers to Armed Forces streamlines procedures and eliminates delays because the expenditure can be made “without reference to the MoD”, which is misnomer. This is hardly the case because  nothing can move without concurrence of the Integrated Financial Advisor (IFA) who in essence is the mini-MoD with the same attributes as the MoD bureaucrats – ‘lord and master’, unaccountable and even bigoted as seen by one such specimen flying a flag like an Army Commander recently; photos flashed on social media. IFA is well versed in playing ‘dog in the manger’ with files running back and forth under directions from MoD; specialist in red-tape and putting spokes in cases all and sundry. With all the hype of ‘Digital India’, digitization and technology, why the IFA system and approval of cases has not been brought online should be very obvious. Very simply if this were done, the red-tape and needless delays would be eliminated. It would also be possible to trace where the file (s) have been stuck, who has been sitting on the case and for how long. But worst for the vested actors, it will expose the corruption in the system. Whether we have the will to do so is the question.  

There are innumerable instances of IFAs delaying approval for purchases out of Army Commanders Special Financial powers on various pretexts, even enforcing surrender of funds despite troops fighting insurgency and needing urgent procurements. In the case of equipment being purchased from Army Commanders Special Financial Powers, the concerned vendors must visit the IFA personally with the ‘moolah’ bag otherwise the case will keep hanging. Yet, these organizations are not touched; not one single IFA probed for corruption.  Former IFAs on TV debates have displayed arrogance and complete disdain for Armed Forces, which is hardly conducive to supporting combat equipping and efficiency.    

‘Digital India’ is being coordinated by the Department of Electronics & Information Technology (DeitY) and implemented by the entire government. As reported in the media at the time of launch, ministries were to be posted with a Chief Information Officer (CIO) or Chief Technology Officer (CTO), which could begin with 10 major Ministries. Logically MEA, MoD, MoF should have been digitized by now. But is this ‘static’ digitization and why has the IFA system not been put on-line? The excuse of security can’t stand logic because developing secure networks coupled with ‘need to know’ access is no big deal.

If IFA and MoD are put online, delegation of more and more financial powers may not be even required as cases can be processed speedily. A truly digitized MoD would not have occasion for the MoS (Defence) suddenly discover that the biggest spokes in Prime Minister Narendra Modi’s pet initiative ‘Make in India’ are the unaccountable MoD bureaucrats themselves. Increasing the financial powers of Service Vice Chiefs fivefold is good for public consumption in face of approaching elections, but strictly speaking it is not without reference to MoD with IFA’s performing the same function. What the Defence Minister needs to focus on is getting the system of approvals by IFA and MoD online for faster clearances, and defence allocations of minimum 3% of GDP.

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Lt Gen Prakash Katoch

is a former Lt Gen Special Forces, Indian Army

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