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चैत्र कृष्ण पक्ष, शुक्रवार, चर्तुथी

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Fund-Starved Army Saddled With Rs 5k-Cr GST


Date:- 21 Mar 2018


Even as the Army is battling with critical shortage of ammunition, arms, assault rifles, battle tanks and bulletproof jackets and inadequate Budget to tide over these issues, the Government has saddled them with an additional burden of Rs 5,000 crore in the form of Goods and Services Tax (GST). There is no provision in the 2018-19 allocations to fill this gap.

The Navy already faced with a Budget deficit of 40 per cent accumulated over the past few years, and the IAF also faced the same problem thereby impacting their modernisation drive. In fact, customs duties and new taxation laws have hit the three forces hard.

In addition, the Rashtriya Rifles, the Army’s anti-insurgency force now tackling terrorism in Jammu & Kashmir, is also short of funds by more than Rs 136 crore due to less Budget.

It is likely to have an adverse impact on the sustained campaign in the strife-torn State and the Rashtriya Rifles desperately needs state-of-the-art close quarter battle weapons, bulletproof jackets and communication systems. Nearly 65 battalions (one battalion has 1,000 soldiers) are now deployed in J&K. The force was raised in the early 1990s after full blown insurgency erupted in the border State.

As the Army flagged these matters during its deposition before Parliament’s Standing Committee on Defence, the panel noted that “an additional burden of Rs 5,000 crore will be levied on the Army because of the new taxation laws in the form of GST. This has not been accounted for in the current year’s Budget for the Army.”

Urging the Defence Ministry and the Government to take note of this issue, the Standing Committee said “reasonability be shown in the Budget by way of providing for the additional burden to the extent of Rs 5,000 crore.” In its report tabled in Parliament recently, the panel said it desires to be apprised of the measures taken in this direction.

Raising concern over a deficit revenue Budget to the tune of Rs 9,282 crore, the panel urged the Government to do the needful to plug the gap. Revenue Budget caters to day-to-day operations, including maintenance of weapons, supply of ammunition and fuel.

The Committee said the Budget for operations and maintenance is a critical component for ensuring operational preparedness at any given point of time.

Problems on this count will not only affect the serviceability of the equipment that the Army is holding but may also lead to legal issues on account of not making payments in time.

The amount of Rs 9,282 crore covers mandatory requirements under transportation (Rs 889 crore), maintenance works (Rs 1,413 crore), supplies (Rs 1,419 crore, ordnance store (Rs 5,425 crore) and Rashtriya Rifles (Rs 136 crore).

In fact, Army vice-chief Lt General Sarath Chand in his deposition before the parliamentary panel said the “budget has dashed its hopes,” and the Army may be forced to close down as many as 25 ‘Make in India’ projects. He also said there is no separate allocation for ensuring the safety of Army camps, which have been subjected to several ‘fidayeen’ attacks.

“This money has to be found from the same Budget, leaving us with no choice but to re-priorities either to reduce our requirement as far as security of military stations are concerned or to go slow in other acquisition,” he said. The vice-chief also informed the panel headed by BJP leader Major General BC Khanduri (retired) that at present 68 per cent of its equipment is in the “vintage” category.

During the deliberations in the panel on Demands for Grants (2018-19), the Committee said any modern armed forces should have one-third of its equipment in the vintage category, one-third in the current category and one-third in the state of the art category.

However, the Army at present has 68 per cent in vintage category, just about 24 per cent of the current category and only eight per cent of the state of the art category. Observing that this situation does not “auger” well for the Army to fight a two-front war with Pakistan and China, the panel said the huge deficiencies and obsolescence of weapons, stores and ammunition is matter of concern.

But the allocation for modernisation in this year’s Budget has a “different story to tell,” said the committee, adding the allocation of Rs 21,338 crore for modernisation is insufficient even to cater to committed payments to the extent of Rs 29,033 crore earmarked for 125 ongoing schemes, emergency procurements of armaments and weaponry for ten days of intense war.

As regards the Navy, due to new taxation laws and customs duties, it will have to shell out Rs 800 crore while this figure stood at Rs 427.28 crore in the last fiscal. Similarly, in the case of the IAF, the parliamentary panel was apprised of the fact that the Service paid Rs 943.62 crore in 2016-17 which was hiked to Rs 1,614.28 crore in 2017-18. This amount was not reimbursed to the IAF, the panel noted.

The estimated fund outgo for next fiscal is Rs. 1726.98 crore. The fund allocated against committed liabilities is Rs 33,100 crore against projection of Rs 72,482 crore. In case of new schemes, the allocation is Rs 2,670 crore against a required projection of Rs 5,483 crore.

The panel suggested that appropriate allocation be made so as to address the issues of taxation in the budget2018-19 and by way of keeping in mind, the additional burden levied on the Air Force on account of hike in duties paid during the year, 2017-18.

Courtesy: The Pioneer, Wednesday, 21 March 2018 | PNS | New Delhi