The Standing Committee on Defence, 2017-18 of the Sixteenth Lok Sabha highlights the idea of Buy Indian-IDDM (Indigenously Designed Developed and Manufactured). The Committee expressed concern over the import content of equipments produced and developed by Defence Research and Development Organisation, Ordnance Factories and Defence Public Sector Undertakings because of the dependence it creates for military hardware on foreign suppliers. The Ordnance Factory Board’s import content in 2016-17 was 11.79%, down from 15.15% in 2013-14. Compared to other big Defence PSUs like Hindustan Aeronautics Limited, Bharat Electronics Limited or Bharat Dynamics Limited, OFB has one of the least dependence on imports which points to high degree of indigenisation that it has achieved or maintained.
main battle tanks, infantry combat vehicles, specialised armoured vehicles,
artillery guns, air defence guns, rocket launchers, etc. The OFs have stood the
Indian government in good stead during wars in 1947, 1965 and 1999 with
Pakistan and in 1962 with China. Among all the arms of Ministry of Defence, OFs
require the least budget, Rs. 50.58 crores out of a total of Rs. 2,01,901.76
cr. in 2019-10, as they are able to take care of most of their costs by
generating revenues from supplying items and equipments to Army, Navy and Air
Force. It says something about the efficient operation of OFs. Former Chief of
the Army Staff General V.P. Malik has also publicly praised OFB for timely
supply of ammunition and equipments during Kargil war but highlighted the
problems faced in procuring items through import at short notice.
to Vice Chairman of National Institute for Transforming India – NITI Aayog,
Rajiv Kumar a big-bang economic reforms programmes has been undertaken during
the first 100 days of the second Narendra Modi government as part of which high
pace disinvestment of PSUs will take place and organisations untouched so far
like Ordnance Factories will be corporatised. He doesn’t hide the fact that
foreign companies will have smooth access to excess unutilised government land
as the possibility of local community protests will be non-existent. OFB alone
has 60,000 acres. The government is likely to fully privatise or shut down over
40 PSUs in this period. It may remove the cap on foreign direct investment to
be able to make is possible to sell companies like Air India, where it didn’t
have much success in the last five year term.
required to maintain an idle capacity to take care of up to three times demand
surge during impending wars. A profit making venture will not be able to do
this. In stead, to sustain these ventures government, in a monopsony market,
may have to place orders for things not required or will have to bear the
expenses of these PSUs or may have to create artificial war like situations to
boost demand, none of which is in national interest.
Comptroller and Auditor General report on Operation Vijay in Kargil reveals
that supplies valued at Rs. 2150 cr., for orders placed with domestic and
foreign private companies, were received after the end of hostilities in July
1999, of which, supplies worth Rs. 1762.21 cr. were received six months after
the end of hostilities. Relaxation of rules and procedures in the face of
emergency cost government Rs. 44.21 cr., supplies of Rs. 260.55 cr. did not
meet quality standards, shelf life of ammunition worth Rs. 91.86 cr. had
expired, purchase in excess of authorisation of requirement was worth Rs.
107.97 cr. and ammunition worth Rs. 342.37 cr. was imported whereas it was
available indigenously with OFs. This is enough proof of the famed quality and
efficiency of private sector.
addition it points to privatisation opening up new possibilities of corruption.
Central Bureau of Investigation has booked a case against British company Rolls-Royce
for having paid commission of Rs. 18.87 cr. to a Singapore based company
Aashmore, which was appointed as a commercial advisor through its director
Ashok Patni, to procure about hundred orders from HAL in violation of the
integrity pact, a tool for preventing corruption in contracts.
asset monetisation, an euphemism for asset sale, is supervised by Department of
Investment and Public Asset Management, which too has been named to mislead.
Once the assets are sold there will be nothing left really to manage. First
‘demonetisation’ in 2016 created a panic among people and now there is asset
‘monetisation.’ Both moves were essentially planned to help the moneyed. The
land acquired from farmers, sometimes without paying any compensation – except may
be for the standing crop, in the distant past is now going to be handed over to
foreign companies in the name of disinvestment.
this year two payouts in the form of dividends and buyback, totaling Rs. 2,423
cr. forced HAL to borrow to pay salaries to its employees, first time in its
history. Life Insurance Corporation, which holds two thirds of India’s life
insurance market share, is now going to be publicly listed so that its shares
will be up for trading, was forced by the government during 2014-18 to spend
Rs. 48,000 cr. to help it reach its disinvestment target. In 2018-19 the
government raised Rs. 84,972.16 cr. exceeding its target of Rs. 80,000 cr. This
year the disinvestment target is Rs. 90,000 cr. LIC was also forced to buy the
most debt ridden public sector bank Industrial Development Bank of India
wholesale, which had 28% bad loans. It is clear that when private investment is
not forthcoming the government is fleecing its own entities. Narendra Modi has
claimed more than once that as a Gujarati he knows how to manage the money.
While he was Chief Minister, Gujarat State Petroleum Corporation was created
with a loan of Rs. 20,000 cr. When he became the Prime Minister, a Central PSU
Oil and Natural Gas Commission bought it for Rs. 8,000 cr. and is now
responsible for its debt servicing.
government proposes to create an autonomous holding company which will subsume
all state owned firms and will not be answerable to bureaucracy when it’ll come
to selling assets. This will culminate the process of sell-off of public
Now that economist Jean Dreze has called the bluff on PM about the purpose of abrogation of Articles 370 and 35A in Jammu and Kashmir to open up the path of its development, whereas J&K is ahead of most other Indian states in terms of human development indices, it appears that possibility of additional 2.2 cr. hectares of land becoming available for possible sale to private companies may have been an important factor weighing on the Gujarati minds in downgrading the autonomous status of J&K Assembly.
By Sandeep Pandey,
Socialist Party (India)
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