The Big Story: Credibility at stake

On Tuesday, Congress vice president Rahul Gandhi claimed that the Centre had been reluctant to call for the winter session of Parliament because it wanted to avoid questions about the renegotiated deal to buy Rafale jets. The deal for 36 fighter jets, announced by Prime Minister Narendra Modi during a state visit to France in 2015, is slowly threatening to undermine the Bharatiya Janata Party’s claim to being free of corruption.

At the heart of the controvery is a 2012 agreement with the French aviation company Dassault to buy 126 Rafale fighter jets that had been finalised by the previous Congress-led United Progressive Alliance regime. The Modi government scrapped this deal and struck a new one to acquire 36 Rafale fighters through a government-to-government arrangement with France. The Congress has alleged corruption, claiming that the cost per fighter has increased dramatically. It also contends that the new deal has been structured to benefit industrialist Anil Ambani’s Reliance Defence. The deal signed by the Congress government had made the state-run Hindustan Aeronautical Limited the defence partner. The new deal will be a joint-venture between Dassault and Reliance Defence.

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A two-part investigation by Business Standard has raised disturbing questions about the arbitrariness with which the agreement was reached. It seems clear from the statements of Manohar Parrikar, who was defence minister at the time, that Modi struck the deal without first clearing it in the Cabinet and the Cabinet Committee for Security, the highest decision-making body consisting of senior ministers. Approval by the Cabinet Committee for Security is essential under the Defence Procurement Procedure that guides all defence deals. “Modiji took the decision, I back it up,” Parikar told Doordarshan on April 13, 2015. The deal was possibly been cleared post-facto, as per the assertions of the present Union Defence Minister Nirmala Sitharaman, who has dismissed allegations that anything was amiss.

The Centre has blamed the Congress regime for the manner in which the new deal was reached. The BJP government has said that the Congress administration dragged its feet on the agreement for 10 years, putting India’s defence capabilities under severe pressure. The new deal to buy 36 fighters instead of 126 will fill the gap as soon as possible, keeping geo-political interests in mind, the government has asserted.

But the new deal is for all practical reasons a single-vendor agreement. Unlike during the Congress regime, there was no competitive bidding. In fact, the second-lowest bidder in the previous agreement, Eurofighter, also cleared the Indian Air Force technical assessment in 2010 and had indicated that it was ready to apply for a fresh bid.

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It isn’t clear why the BJP government rushed into a deal without a bidding process, which could have reduced the cost of the jets. In fact, the Centre has still not revealed the exact price per jet in the new agreement. NDTV attributed the government’s inability to reveal the price to a confidentiality clause in the agreement. But this is still not an official position.

Most of all, the controversy involves the violation of institutions and due process by the Prime Minister’s Office. If Modi did actually sign the deal without prior sanction from the Cabinet and the Cabinet Committee for Security, this would constitute clear overreach. Such clearances were made mandatory to curb the discretionary powers of the Prime Minister’s Office and act as a crucial check and balance in deals that involved crores of rupees of public money. Full disclosure is vital if the government cares for its credibility.

The Big Scroll

  • The Rafale deal is a perfect case study in what is wrong with India’s defence planning and purchases.  

Punditry

  1. Simultaneous elections proposal goes against basic principles of the Indian Constitution, says Suhash Palsikar in Indian Express. 
  2. MK Narayanan in The Hindu writes that having one set of nations ranged against China is not going to be easy in the prevailing circumstances. 
  3.   Success in tackling Delhi’s air pollution could provide a template for making other cities liveable – an essential requirement for attracting investment and generating quality jobs, says Montek Singh Ahluwalia in Mint. 

Giggles

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“Under the scheme the government continues to use the minimum support price as a guide. But it does not buy the produce from the farmer. Instead it partly compensates the farmer for the difference between the prevailing market prices and the minimum support price it declares. The compensation is based on the average sale price of the specific crop in Madhya Pradesh and two other neighbouring states, calculated at the end of the season. The most the state is required to pay farmers is the difference between the average sales price of a commodity and the minimum support price.”