Defence Minister AK Antony admitted here on Thursday that his Ministry does not have money to sign new contracts like medium multi-role combat aircraft (MMRCA) as 92 per cent of the capital budget for this fiscal was exhausted for ongoing projects and the remaining amount is earmarked for meeting contractual obligations.
Making this observation, he said given the magnitude of the MMRCA contract, pegged over Rs 45,000 crore, the contract will only be signed in the next fiscal. The Defence Ministry is now negotiating the contract with French aircraft manufacturer Dassault for its Rafale aircraft which emerged as the lowest bidder. The Minister, however, rubbished reports that the proposed MMRCA contract may be cancelled due to the complexities involved in negotiations and claimed that it will materialise in the next financial year. He said this when asked if the Ministry is looking for other options if the Rafale deal does not go through.
As regards resource constraint, Antony told reporters after inaugurating the eighth international Defence exhibition, Def Expo 2014, that his Ministry had spent 92 per cent of the capital budget of Rs 87,740.41 crore till now and the remaining amount was too less for big ticket items like MMRCA. “There is no money for major procurements,” he said.
Refuting reports that the Finance Ministry had cut the Defence budget for this fiscal due to economic slowdown, he said there was an unforeseen rise in the revenue expenditure due to rising cost of fuel. In this backdrop, his Ministry sought more funds from the Finance Ministry to meet the shortfall but it refused. However, the Finance Ministry agreed not to cut the Defence budget, Antony said.
Faced with this situation, more than Rs 7,900 crore from the capital budget was shifted to the revenue budget of Rs 1,16,931.41 crore as the Services cannot afford to cut down on training and maintenance of weapon systems, he said. The Minister also said unlike in the past few years, his Ministry has spent the entire capital budget allocated to it in the last four years thereby indicating that acquisitions are on track. On the issue of modernisation slowing down due to blacklisting of foreign companies, Antony said procurement has become transparent and that India will only buy weapons on the basis of merit and vendors should refrain from lobbying.