The ministry now faces a situation where a part of its funds earmarked for new purchases and upgrades are likely to be shifted either to the revenue head or returned to the central kitty, in what would be a dent to modernisation efforts. Official spending numbers obtained by ET indicate that the defence ministry could fall short of its target of signing deals worth over `. 1 lakh crore. The air force has been able to spend funds at a good pace, with 73% of its `. 33,657-crore capital budget exhausted. DRDO, meanwhile, has spent 64% of its ` . 7,788-cro re allocation.
Officials believe the air force may end up overshooting its budget and could pull in funds earmarked for the army and navy.
With several major projects stuck -the M777 howitzer purchase and selfpropelled howitzers, for example -the army is at the bottom of the spending list. Only 45% of its Rs 27,227-cro re capital budget has been exhausted till the end of December. The Navy fares slightly better, having spent 57% of its Rs 25,003-crore allocation.
The numbers also reflect an increasing concern on the part of the private sector over the government’s ability to go ahead with major `Make in India’ projects that require firm orders.
While there have been several policy changes which have been welcomed by the industry, the lack of substantial orders has been a spoiler.