With tension persisting at the Line of Actual Control (LAC) for the last nine months and the armed forces on full alert, the Economic Survey on Friday said the allocated capital Budget for defence was fully utilised. In fact, the entire allocation was consumed. In fact, this was the trend since 2016-17, reversing the previous trends of surrendering of unutilised funds, it said.
The capital allocation for 2020-21 was Rs 1,18, 555 crores and the overall budget allocation for defence was Rs 4,71,378 crores including civil estimates and pension. The allocated budget for the last fiscal was Rs 40,367.71 crore over the budget estimates of 2019-20.
The capital funds prior to 2016-17 used to be returned to the Government due to under-utilisation. The reasons for this were long procurement process and delays in finalising deals in time during the financial year.
The nearly complete utilization in 2020-21 was due to the armed forces opting for emergency procurements to shore up their operational readiness due to the situation at the LAC in Eastern Ladakh. At present, the entire 4,000km LAC is under the watch of the armed forces.
Army Chief General M M Naravane had said on June 12 that last year 38 deals inked through ‘emergency and fast track’ route worth about Rs 5, 000 crore and in addition, capital procurements worth over Rs 13, 000 crores were concluded.
The Economic Survey said the focus now was on giving a push to indigenisation and the Defence Public Sector Undertaking’s (DPSU) and Ordnance Factories (OF) were increasing the indigenous content in the equipment’s and products manufactured by them. “The indigenous content (Degree of Indigenisation) as on March 31, 2020 was 74.56%,” it stated.
On efforts to boost private sector participation in domestic defence manufacturing, it said as a policy, DPSUs and OFs have been outsourcing many of their requirements and “the value of outsourcing in terms of value of production for the FY 2019-20 stands at 41.70%.”
Also, during the past few years a wide vendor base has been developed that includes a large number of medium and small-scale enterprises and large scale industries, the Survey noted. Exports from Ordnance Factory Board (OFB), DPSUs and the private sector (based on authorization issued by Department of Defence Production (DDP) have increased from Rs 4,682 crore in 2017-18 to Rs 9,116 crore in 2019-20, the survey said.
The report said since opening of defence sector for private sector participation in 2001, so far 44 Foreign Direct Investment (FDI) proposals and Joint Ventures have been approved for manufacture of various defence equipment, both in public and private sectors.
