Parliamentary panel orders more funding for navy

By Ajai Shukla

Business Standard, 26th Dec 2014

A major trend in India’s defence spending has been the navy’s growing share, which has risen from 4 per cent of the defence allocation in the early 1960s to a high of 18.12 per cent in 2012-13.

This is seen worldwide as evidence of an increasingly muscular profile in the Indian Ocean region, where India will not just protect its 7,517 kilometres of coastline and 1,197 islands, but function as the premier maritime power that secures freedom of navigation over 6,000 kilometres of international sea lines of communication (SLOCs) in its vicinity.

Parliament’s Standing Committee on Defence fears this signal is being diluted. This year, the navy was allocated just 15.72 per cent of the defence budget, down from 16.79 per cent last year. That amounts to Rs 37,808 crore (USD 5.95 billion).

Unprecedentedly, the parliament committee has ordered the government to allocate more funds to the navy.

The committee says the alarming rise in accidents, including the 2013 sinking of INS Sindhurakshak --- a frontline Russian Kilo-class submarine --- indicates the navy needs more money for purchasing modern equipment, maintaining it properly and training seamen to the required level of skill.

Citing the “spurt in accidents”, the committee notes: “in most of the cases of accidents, the cause is either material failure or human error. This implies that either the equipment and machinery acquired are substandard or there are inadequacies in training. The Committee feel that the inadequate funding will further aggravate the condition of Indian Navy and lead to compromises in operational preparedness. Therefore, it is the absolute necessity to allocate ample funds to Navy under intimation to this Committee (sic).”

The panel reveals that the navy is significantly understrength. The report says: “In 2012, [the defence ministry] approved 198 ships and submarines for Indian Navy. The present force level is 127 ships, 15 submarines and 236 aircraft. There are presently 14 conventional submarines (including Sindhurakshak) in the Indian Navy. Most conventional submarines are over 20 years old and are reaching the end of their service life.”

Worryingly, this year’s capital allocations, i.e. the funding for new equipment purchases, will be mostly expended on “Committed Liabilities”, i.e. on annual instalments for equipment procured during previous years. Of the total capital allocation of Rs 23,832 crore, about Rs 17,313 will be expended on committed liabilities, leaving just Rs 4,599 crore for new purchases.

The committee sharply criticises large cost overruns on major warship projects. It notes that Project 15A, for building three Kolkata-class destroyers, was sanctioned at Rs 3,580 crore, but eventually cost Rs 11,662 crore, more than thrice what was initially envisaged. In Project 28, which involves building four Kamorta-class anti-submarine corvettes, the sanctioned cost of Rs 3,051 crore rose to Rs 7,852 crore. The largest overrun was for the Indigenous Aircraft Carrier, INS Vikrant, which went up almost six-fold from the sanctioned Rs 3,261 crore to Rs 19,341 crore.

A key cause of these large overruns has been the MoD’s budgeting methodology, which involves sanctioning a project at a notional (invariably undervalued) cost and then arriving at a more realistic figure once the first ship of that project is physically built.

The committee has noted that the project cost for INS Vikrant was grossly underestimated in 2002. In somewhat garbled prose, the report says: “Cost overrun was mainly due to reasons of cost estimation for [cabinet] sanction in 2002 at a time when (the vessel’s) ‘form & fit’ was still emerging; limited information on many Aircraft Carrier specific equipment & material due to inadequate domain knowledge; Equipment costs, emerging technological advances and new generation equipments in IAC (sic).”

The MoD has been asked to resolve this issue and apprise the committee.