Cag’s rafale report

Cag’s rafale report

Political fisticuffs will continue, India’s defence procurement is in a mess.

With the tabling of the Comptroller and Auditor General’s (CAG) report on the Rafale fighter aircraft deal in Parliament, both BJP and Congress are claiming vindication. While the ruling party is pointing to the report’s finding that the fighter jet deal negotiated by it in 2016 was 2.86% cheaper – per unit basis – than the 2007 deal for the same aircraft that was being negotiated by the previous UPA regime, Congress is still hinting at impropriety because the report redacts the actual prices of the aircraft and associated components.

In fact, CAG itself finds comparing the two deals – UPA’s 126 aircraft and NDA’s 36 aircraft – quite challenging. Not only were the quantities different, the auditor also had to factor in price escalation over the intervening years as well as differences in the packages themselves. UPA’s 126 aircraft deal had a significant transfer-of-technology component unlike NDA’s 36 aircraft in flyaway condition. Nonetheless, the CAG report lays out the reasons for the cancellation of the UPA deal as Rafale’s French manufacturer Dassault Aviation refusing to provide guarantee for the aircraft that were to be produced by Hindustan Aeronautics Limited and failure to determine the manpower cost of manufacturing in India. This setback after a 15-year procurement process had created a real crisis for the Indian Air Force whose fighter squadrons are fast depleting.

But BJP may have scored a self-goal when it declared after coming to power that it would get a better fighter aircraft deal. As the CAG report shows, three items of the new Rafale deal including the basic aircraft were procured at the same price as the old deal. It also indicates that the marginal price drop overall happened at the cost of removal of banking and performance guarantees, a standard feature of such contracts. Congress is bound to play this up, and political fisticuffs will continue.

On several matters, the Narendra Modi government has failed to answer the opposition’s questions clearly and unequivocally. To cite one of very many, why can’t the price of the Rafale jet be revealed to a select parliamentary panel, especially as estimates are widely available and cannot be tough to find out for anyone determined to dig? Opacity in the government’s arguments has enabled the opposition to look for advantage. Finally, if this is the tortuous path that every defence procurement has to take, it is a tragedy. A better defence procurement process needs to be worked out expeditiously for the sake of national security.