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Fund Shortage Issue Looms Large Over Sale of $1 Billion US Naval Guns to India - Analyst

New Delhi (Sputnik): The Indian Navy has been pressing for additional funds to strengthen its capabilities in terms of additional warships and other equipment for the last few months. With the limited resources available, it will not be enough for the services to fund the contracts signed during the past few years, an analyst says.

The Indian Defence Ministry has received a green signal for a request that it posed before the US government a few months back for the purchase of naval guns for warships. This will be another addition to contracts worth over $15 billion already signed since April 2018. Laxman Kumar Behera, a research fellow at the Delhi-based Institute for Defence Studies and Analyses, feels that the annual budget for the services will not be able to meet the requirement of the signed contracts.

“An outgo at the rate of 15 percent per year would require an additional amount of $2.5 billion to pay for the contracts the Defence Ministry had signed since April 2018. It does not look like the additional budget and relief in custom duty in annual budget would be enough to cater for that”, Laxman Kumar Behera said.

The concerns have been raised as the share of the Navy’s budget dropped from 18 percent in 2012-13 to 13.66 percent to 2019-20. Apparently, despite severe the resource crunch to fund signed contracts, the Indian Defence Ministry has signed at least 30 contracts with a value worth nearly $17 billion since April 2018.

“The Indian Armed Forces are currently in the midst of a huge modernisation process. However, owing to the resource crunch, their ability to pay for it has come under a great deal of stress. The resource crunch has been so intense that they are finding it difficult to even pay for the past contracts”, Behera added. 

On Wednesday, the US administration approved the sale of naval guns, including equipment, to the Indian Navy at an estimated cost of $1.02 billion. The US administration claimed that the possible sale was notified to the Congress after the Indian Defence Ministry requested to buy up to 13 MK 45 naval guns and 3,500 D349 projectiles, as well as MK 92 ammunition.

“Given the gloomy forecast of resource availability, the Defence Ministry has to find a way to fund its modernisation programmes”, Behera warned.

The resource crunch issue was raised by Indian Navy Chief Admiral Karambir Singh during the high level naval commanders’ conference last month. Other senior officials of the Navy have echoed the sentiment at public platforms as well. “We will certainly seek more money because of the challenges in meeting our aspirations within the available budget”, Vice-Chief of the Naval Staff G. Ashok Kumar said in September.

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