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Rediff.com  » News » Major defence deals may get hit due to shortage of funds

Major defence deals may get hit due to shortage of funds

September 04, 2012 00:08 IST

Faced with a resource crunch, the Union defence ministry will undertake a review next month of major military projects such as plans for acquiring 126 combat aircraft and raising a Strike Corps in the northeastern sector.

The review will be carried out after an assessment is made on the performance of the economy at the end of the second quarter of this fiscal, government sources said.

The defence ministry has been allocated Rs 1.93 lakh crore for the current fiscal but it had made a demand for additional funds of more than Rs 40,000 crore for meeting its capital requirements.

Sources said the lack of funds may also affect the army's plans to raise a Mountain Strike Corps alongwith China under a Rs 64,000 crore project.

The plan has already hit a roadblock due to objections raised by the government over the accretion along the boundary with China.

The defence ministry has undertaken a major defence modernisation project under which it is planning to spend $100 billion on procurements for armed forces in the next five to ten years.

Recently, Defence Minister A K Antony also reviewed the expenditure made by the armed forces in a meeting with the three services vice chiefs, they said.

During the meeting, the defence minister was apprised about the progress made by the defence forces in their respective procurements plans.

Sources said the shortage of resources may also affect the army's plans to raise a Mountain Strike Corps alongwith China under a proposed Rs 64,000 crore project.

The plan has already hit a roadblock due to objections raised by the government over the accretion of forces along the Chinese boundary.

In recent times, the services have also been asked to priortise their procurements and avoid duplication in acquisitions.

The major Indian defence procurement programmes include the multi-billion dollar deal for procuring 126 multirole combat aircraft, over $2 billion deal for procuring six mid-air refuelling tankers, six additional C-130J Super Hercules aircraft from the US.

In recent times, the defence ministry has cleared several proposals expected to be worth over Rs 40,000 crore at the meetings of the Defence Acquistion Council.

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