A deal was signed by the Modi govt to purchase 36 Rafale jets at a rate much higher than what was negotiated by the UPA government. Modi government has refused to make public the price of the aircraft, saying a secrecy clause exists between India and France. However, this secrecy clause only binds India from revealing the technical specifications and operational capabilities of the aircraft, and not the price. French manufacturer Dassault has already released the total price of 36 aircraft, which is about ₹60,000 crore. This makes the per aircraft price to be ₹1,660 crore, as against ₹526, as negotiated by the UPA. The UPA’s price included transfer of technology (ToT), and the state-owned Hindustan Aeronautics Limited (HAL) was to make 108 aircraft. Under the new deal, there is no ToT, and HAL, which has a good record in defence production, was superseded by Reliance Aerospace owned by Anil Ambani. Also, as per Dassault Aviation’s Annual Report, Qatar and Egypt brought the same aircraft at Rs 1319 crore. No prior approval of the Cabinet Committee on Security committee was sought.

IL&FS Scam

Liabilities of yet another company, Infrastructure Leasing & Financial Services(IL & FS), due to steady default, is leaving a direct impact on the Indian economy. The company owed ₹91,000Cr to banks, finance institutions and ordinary investors as of 31st March 2018. The company's net profit has fallen by 900%. Its debt jumped by 44% and now does not have the resources to pay back the loans. Its equity now has been classified as 'junk' by the rating agencies, thus dismissing any chance of redeeming the loan. India's biggest insurer, LIC, the biggest bank, SBI and the Central Bank of India hold 40% of the equity of IL&FS. How did a company, with 40% of its share owned by LIC, SBI and Central Bank of India, accumulate a debt of ₹91,000Cr? How did this go unnoticed by the representatives of LIC, SBI, etc.? Adding fuel to fire, the PMO and the Finance Ministry are now pressurising the RBI, SBI, LIC and NHAI to bail out this company. Here, it is to be noted that 35% shares of the company are owned by foreign investors, a Japanese fund and an Abu Dhabi fund being the major ones. By forcing Indian institutions to bail out this sick company, the Modi government will also be bailing out the foreign investors. Why is the government showing an extraordinary amount of interest in bailing out IL&FS using public money?

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Image Courtesy: Financial Express