More on Covid-19

NEW DELHI: No major deal for new weapon systems for the armed forces will be inked in at least the first quarter of the ongoing fiscal in the backdrop of the government grappling with the huge financial impact of Covid-19 pandemic in the country.With the finance ministry putting a stringent cap on expenditure by different ministries in the first quarter of 2020-21 (April-June), the limited funds available with the defence ministry for military modernisation will go towards “committed liabilities” or instalments for defence deals inked earlier. “Some payments to foreign armament companies might even get deferred,” said a source.The department of military affairs (DMA), headed by chief of defence staff General Bipin Rawat , has told the Army, Navy and IAF to put all capital acquisitions “on hold” till the Covid-19 situation improves, said sources.The MoD and DMA, on being contacted by TOI, refused to comment. A source, however, said, “It can’t be business as usual. With the government’s cash position under heavy stress, the directive is to restrict capital expenditure to 15-20% in the first quarter (instead of 25%) in the MoD. This amount will cover only committed liabilities.”“New deals with foreign companies as well as some payments, especially to the defence PSUs here, will have to be delayed,” he added.The armed forces have been allocated only 65% of what they wanted under capital expenditure for 2020-21 to plug critical operational gaps against the collusive threat from China and Pakistan . The overall capital allocation was just Rs 1,13,734 crore against the projection of Rs 1,75,702 crore, leaving little for new acquisition projects.In terms of committed liabilities, India is paying hefty milestone-linked instalments for deals like the one of Rs 59,000 crore for 36 French Rafale fighter jets inked in September 2016 and the other of Rs 40,000 crore for five squadrons of Russian S-400 Triumf surface-to-air missile systems in October 2018.The arrival of the first four Rafales in India next month has been delayed by “a few weeks” due to the coronavirus pandemic, while the S-400 deliveries will begin only by end-2021 at the earliest.The overall Rs 3.37 lakh crore defence budget (revenue and capital) this year works out to just 1.5% of the projected GDP for 2020-21, which is the lowest such figure since the 1962 war with China. Another Rs 1.33 lakh crore has been allocated separately for defence pensions of retired military and civilian personnel. With the country confronted with an unprecedented crisis due to Covid-19, a cut in the overall defence budget could also well be on the cards.