National Seminar on Capability Sustenance through Effective Revenue Procurement: Problems and Perspectives

Executive Summary

Introduction

1. The critical deficiency in ammunition has been adversely commented upon by the C&AG in their recent audit report. Lack of spares for the Air Defence Equipment , shortage of spares for maintenance and overhaul of both T 72 and T90 fleet or the recently scrapped tenders for Assault Rifles after four years of fruitless delay are indeed a cause for concern . The revenue supply chain consists of a number of stake holders viz the DDP, the Ord Fys, DPSUs, DGQA and the DRDO. MGOs branch and Ordnance Services Dte are the stakeholders in the Service HQ along with the PIFA (O) representing the integrated finance. In order to understand the nuances of shortfalls in revenue procurement, we Firstly need to look into our primary source of supply ie the Defence Industrial Base and analyse it both in terms of capacity and the capability for equipment sustenance. Secondly, we require to identify the impediments in procedural and policy functions that lead to delays, shortfalls and our inability to achieve the desired targets. Thirdly, there is another dimension that has been having a telling affect on our equipment sustenance and that is, management of revenue budget. Capital to revenue budget ratio in case of the Army stands at 80:20 which is a major cause of concern as 60 percent of the revenue component services the pay and allowances head. This leaves very little for procurement under the stores head which also caters for the budget of the OFB and DPSUs. This coupled with huge slippages and pending orders running into thousands of crs result in locking up a major part of Army’s revenue budget in contractual liabilities.

2. A National seminar on “Capability sustenance through effective revenue procurement: problems and perspectives” was held on 25 Aug 2015. The major issues were:- (a) Defence Economics , Macro Aspects (b) Critical Hollowness in the Army; causes and mitigation strategy (d) Org restructuring for a more effective revenue procurement (e) IFA System in Service HQ – An Appraisal (f) Revenue Budget Management with special reference to stores budget; Challenges and way ahead (g) Post Contract Management and Revenue Procurement ex import, Problem Areas and way ahead