In an interview with ET, Sudhanshu Mohanty, ex-head of MoD finance — in charge of all defence finances of the government in May 2016, months before the Rafale deal — says benchmark price change questionable. Edited Excerpts:A sovereign guarantee is given by a sovereign government ( France ) to another sovereign government ( India ), guaranteeing enforcement of the terms and conditions of the contract signed under their auspices. A ‘letter of comfort’ is definitely not on a par with a sovereign guarantee. Loosely, it can be said to be a ‘ letter of intent ’, as is often used in international contracts. Maybe, morally binding but not legally binding and enforceable. Somewhat akin to a ‘sagaai’, betrothal. Either party can break the promise and go their different ways - and with impunity, although the moral aspect will doubtless stick. However, in matters of a buying nation’s commitment based on public funds, it can cause harm to the nation. Surely, it does not give the comfort that the successor of the President or the Prime Minister will honour the terms. If there are voices raised over a problem in a contract, for example, the successor government may or may not honour what has been promised in a letter. On the other hand, the cost of the contract with bank guarantees would be different as the vendor would have to guarantee the deliverables as per the contract till the time it is made available to the buyer and other terms are fulfilled, that could stretch well up to seven years and more.It has been brought out that the negotiating team came up with a benchmark price that was overruled by the ministry. It wouldn’t be fair on my part to comment on the benchmark price. The more relevant question that needs to be asked is: On what grounds was this overruled? What logic and justifications were adduced on file to overrule the points made by senior ministry officials who negotiated the contract? Further, as per the information available in public domain, the Defence Acquisition Council headed by the defence minister and consisting of all top MoD honchos didn’t recommend the case, instead left it to the Cabinet Committee on Security to take a call. Why? This needs to be looked into. For, not in my fallible memory of defence capital acquisition can I recall such a thing — because it is strange, even queer.This is not morally right. It shouldn’t have been done because it brings no added benefit to the government. On the contrary, hypothetically speaking, if the foreign vendor makes a company with no credibility and no experience of defence production its Indian partner, the government ultimately is the loser.Not enough work has been done on this front. The cost of production, in terms of labour costs, is significantly lower in India. How much this increase in work hours would have impacted the pricing of the deal has to be studied. HAL’s 2.7 times higher man hour requirements vis-à-vis Dassault need to be put through the formulaic PPP model or its variant to equilibrate the labour hours/rates and see the actual difference. Taking into account the difference in cost of living standards and labour rates here, the HAL offer could perhaps have been very competitive.