Defence Minister Rajnath Singh on Wednesday inaugurated the three-day International Conference on Defence Finance and Economics in Delhi. The conference will have participation of delegates from the USA, UK, Japan, Australia, Sri Lanka, Bangladesh and Kenya. Speaking on the occasion, the minister emphasised the importance of the defence-finance framework to enhance the security capabilities of the country. He said that Defence finance has always been an integral part of statecraft, even two to three thousand years earlier.
"Security is broadly categorized into internal security and external security. The responsibility of external security lies principally with the Defense Forces of the country...Defence finance has always been an integral part of statecraft, even two to three thousand years earlier. ‘Arthashastra’ mentions Army’s dependence on strong finance for its upkeep. In the times of Chandragupta Maurya and Ashoka, massive standing armies were maintained," the minister added.
On the need for a healthy framework, he said, "Wherever there is a mature state system, a legal and procedural defence-finance framework is already built-in to ensure prudent management of the defence expenditure. This ensures that the defence spending is well within the allocated budget & full value of money is realized."
The minister talked about some research outcomes, adding that 'there are studies that corruption and waste in the defence expenditure is greatly reduced by a robust system of defence finance."
"We can always try to devise ways towards maximizing the value of money spent on defence needs. For instance, in the case of procurement of defence platforms, either under capital or revenue route, the gold standard of Open Tender should be adopted to the extent possible," Singh further said.
To increased fair competition and better utilisation of public money, Rajnath Singh said that a competitive bid-based procurement process which is open to all, is the best possible way to realize the full value of the public money being spent. "Of course, there would be some rare cases when it may not be possible to go for open tender process," he added.
"To have a fair, transparent and honest system of defence capital and revenue procurements, we must have comprehensive Blue Books, codifying the rules and procedures of procurement of defence equipment and system. These provide rules and guidelines as well as procedures for capital and revenue procurement," he said.
On the comprehensive rule books, Singh said, "We have formulated such Blue books in the form of Defence Acquisition Procedure, DAP-2020 for capital acquisition, Defence Procurement Manual, DPM for revenue procurement, and Delegation of Financial Powers to Defence Services The IFA and CFA work as a team, sailing in the same boat, working towards utilizing public money in a prudent manner. When I am talking about financial prudence here, I mean the financial prudence shown by a person of ordinary intellect towards his or her own money."
"The role of auditors is that of a watchdog or a sentinel. In India, the external audit is done by the Comptroller and Auditor General of India. An independent internal audit mechanism is also a part of the defence finance system in India," he said on the issue of auditing of such an important framework.
Focusing on defence personnel's benefits, Singh said that there should be a sound system of accounting and payment, salary and pension etc., as it frees our defence personnel to concentrate on their core jobs.
"When the functions of defence finance are separated from the core defence organizations, it has multiple advantages. I hope that this International Conference on Defence Finance and Economics will provide the participants with a platform, where they would be able to acquire a better understanding of global trends in the process of defence expenditure and learn from each other," he added.