Vol. XLIII No. 20 May 19, 2019
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CAG Report: An Obfuscation

CPI(M) Polit Bureau has issued the following statement on February 13

THE report tabled in the Parliament on the last day it met before the general election by the comptroller and auditor general `On Capital Acquisition in Indian Air Force’, raises more questions than providing answers.

1)    The report does not cover the issue of offset contracts.  Hence, there is no mention of the Reliance Defence and how the original public sector partner, Hindustan Aeronautics Limited (HAL), who was to manufacture 108 fighter jets was summarily removed by offset contract.  This, we are informed, will be dealt with a separate CAG report!

2)    The CAG report claims that the new Rafale deal 2016 is 2.86 per cent lower than the costs worked out in the earlier 2007 deal.

3)    However, in the 2007 deal, the Indian government was to incur a fixed cost for design and development for 126 aircrafts. When the Modi government, violating all norms of procedure and without any rationale, reduced the numbers to 36, the cost per plane shoots up dramatically by more than 41 per cent.  The CAG, as the auditor, was duty bound to cover this issue, which it did not. 

4)    The CAG admits that, because there is no bank guarantee in the present deal, it is a saving for Dassault Aviation and not for Indian government.  The Hindu newspaper today reveals that the Indian Negotiating Team (INT) had worked out the financial impact of no bank guarantee to be 574 million Euro.

5)    All the calculations presented by the CAG are devoid of absolute figures. The report only speaks in terms of percentage changes.  This is an unusual audit report completely devoid of transparency.

6)    One of the key arguments of the Modi government was that national security concerns demand fighter planes urgently and, hence, the new deal.  But the report notes that of the current 36 planes, the first 18 will come as late between 36 and 53 months and the balance by the 67th month.

7)    The 2007 deal incorporates an element of technology transfer to the HAL for the manufacture of the remaining 108 fighter jets.  This deal by Modi government has no element of technology transfer. This should have brought down the price per aircraft substantially. But the contrary has happened.

It is, hence, clear that this deal by the Modi government is costlier; it is not faster in terms of delivery and, importantly, Indian Air Force does not procure the planes in quantity it actually needs.  Therefore, this deal has imperiled our national security interests.

The Polit Bureau of the CPI(M) demands that the eight-page dissent note by key members of the INT published in The Hindu today must be replied to by the government.  Further, the government must clarify that unlike its submission to the Supreme Court, has it also kept the CAG in the dark by not providing all materials?

This CAG report does not answer a single question concerning the corruption associated with this deal and crony capitalism.  These answers can only be provided by an appropriate independent probe later.

This report is a total obfuscation of truth.  This has, once again, reconfirmed the manner in which the independence and autonomy of constitutional authorities is being assaulted by this Modi government.