Need for a Defence Procurement Regulator

What is the issue?

• A Parliamentary standing committee report has highlighted contradiction between actual defence procurements and budget estimates.
• To resolve such claims union Budget 2018 is expected to announce a regulatory body for defence procurement.

How are defence procurements made in India?

• Defence spending is classified under Non-plan expenditure.
• The respective funds will be allocated by the finance ministry through budget estimates.
• Allocated funds will be utilized by

1. Defence Research & Development Organisation (DRDO)
2. Ordinance factory board (OFB)
3. individual tri-defence forces under ministry of defence

• Defence procurements are typically conducted through a competitive two stage bidding process.
• It happens as per the guidelines contained in the Defence Procurement Procedure of India (DPP).
• Apart from this, defence procurement can also be made through inter-governmental agreements between friendly countries.

What are the concerns?

• The report highlights inadequate budget allocations made by the Ministry of Finance (MoF).
• There are perpetual delays in capital acquisitions.
• Also, there is constant miscommunication between the Ministry of Defence (MoD) and the Ministry of Finance (MoF).
• Persistent failure of the defence ministry to utilise the allocated funds has also contributed to reduction in budget allocations.
• Armed forces are sadly under-equipped and procurement planning is grossly inadequate.
• It is concluded that India is not combat ready.

How could a regulator help?

• The shortfalls can be resolved better by an independent regulator for defence acquisitions.
• Implementation of the procurement policy can better be overseen.
• The regulator could check whether the policies are in line with the current and future requirements of the armed forces.
• A regulator could ensure proper acquisition decisions by MoD, MoF, armed forces and Cabinet Committee on Security.

Source: Business Standard