(Sitharaman and Jaitley)
When Nirmala Sitharaman, ex-JNU, ex-Price Waterhouse Cooper, ex-BBC, was appointed Defence Minister by Prime Minister Narendra Modi, some believed it to be an inspired choice. Others were more skeptical, aware that as a junior minister with not much to show as commerce minister, Sitharaman’s leapfrogging over senior BJP honchos to occupy the important ministerial slot was more symbolic than a substantive move and, so, alas, it has proved. She simply lacks the self-confidence and/or understanding and/or instinct/insight to do the right thing. But she’s up in sensing the extant political balance of power within the Modi cabinet where Arun Jaitley — the most powerful person in cabinet outside of Modi — rules the roost. For Modi, Jaitley is a sort of a talisman — the man who first broke up the consensus forming in the ruling BJP around Sushma Swaraj — LK Advani’s choice — by siding with Modi formally at the Goa session of the party that met to announce the party’s PM-candidate for the 2014 elections. Jaitley has had a particularly deleterious effect on defence of the country in his two stints in MOD in the last nearly four years.
It has recently come to my notice that the reason Manohar Parrikar was eager to return to Goa, other than to be a bigger fish in a smaller pond — or, contrarily to get away from Delhi was, because of his frustration with not being able to do the things that’d have progressed Modi’s ‘Make in India’ programme to achieve arms self-sufficiency by carrying out procedural innovations. As he reportedly told a friend of his something to the effect that “If I can’t do what needs to be done what’s the point in my being defence minister?” The grit in the machine that Parrikar was most upset about was Modi’s decree, at Jaitley’s suggestion, that any defence programme involving expenditure beyond Rs 1,000 crores had to be cleared with the Finance Minister. Under the cover of fiscal control, it provided Jaitley with a veto over almost all defence and national security decisions because very few MOD programmes come in under that low ceiling for the defence spend.
It is this veto Jaitley has used to push his own — but more likely — the PM’s agenda to do with the politically sensitive matter of providing the Modi funders/friendlies, ahem,… favourite “crony capitalists” (whose names are well known) with zero defence industrial experience and near zero manufacturing wherewithal and workforce, the opportunity to get in on the lucrative “defence industry” business. The government may argue that this move creates many more defence industrial-capable entities in the economy. But it puts a spoke in the wheel of companies — Tata, Mahindra, L&T, etc, that had the commercial foresight to invest in, and be part of some of the most sensitive and advanced military projects, without any expectation of raking in the moolah by riding on the coattails of a friendly political dispensation in Delhi.
It is the strategic partnership model articulated in the Defence Procurement Policy 2016 that Parrikar had sought to tweak to allow established companies that had proved their druthers in various strategic programmes with direct involvement, or on the basis of Defence Public Sector Units (DPSUs) outsourcing the most advanced parts of their projects to private companies because they themselves know they are incapable and too inefficient to bring these projects in on time and within cost as the established companies have routinely proved they can do. NSA Doval is in-charge of the strategic systems development programmes and in the know of all this, but is doing nothing. Or, is not in a position to do anything.
Just a month short of the formal decision that would have institutionalized a more economically sensible strategic partnership model for defence production, Parrikar was sent back to Goa, Jaitley was reappointed to also collaterally handle defence, in which capacity he went ahead and junked Parrikar’s innovation and completely reversed course, reverting the procurement process to the lowest bidder (L1) scheme that has been the bane of the defence industry and absolute disaster — the single source of despair for the country seeking a modicum of arms independence. It reinforced the old creaky system in which MOD/Department of defence production bureaucrats go back to relying on DPSUs, because doing so is the safe, fallback option, and favours the buccaneering buckaroos who because they have nothing more than passing acquaintance with specialized defence production, are free to underbid, win contracts, and leave the military treading water because, sure as hell, they can’t produce the advanced hardware in the designated time frame and for the price they quoted to win them the contracts. Further, these newly founded ventures in the business to suck at MOD’s procurement teats, could be L1 winners without any financial basis. Thus, a certain newish corporation set up by a crony capitalist had a turnover of Rs 1,000 cr last year but would be allowed to bid for a contract worth Rs 50,000-60,000 crores! How’s this possible. Well, here the recommendation by the Committee headed by former DRDO chief VK Atre has come in handy. It pegged the minimum turnover of Indian strategic partner at Rs 4,000 crores. This last figure plucked out of thin air? No, because that was the turnover of the DPSU — Mazgaon Dockyard Ltd of the previous year! In the event, with a little bit of imaginative accounting the turnover of Rs 1,000 crores can be stretched to the Rs 4,000 crore level enabling this new crony company to bid. So what will accrue is that these new firms without a clue will flounder for ages just to get going even as the established defence majors in the country are left without contracts and custom, and their facilities lie fallow. Talk of the scale of national waste and the sheer disincentive to Indian companies contemplating investment in the defence industrial sector who have to contend with a system slanted to deliver the goodies to DPSUs and the cronies!! Whereupon there’ll be interminable delays and the familiar armed services rants about unmet urgent requirements will inevitably follow and thereafter the pleas to the government to meet them with, you guessed it, arms imports — of the one-shot Rafale kind that the country pays an arm and a leg for without a trace of technology transfer or any other permanent benefit to the country!!
So, this is the PERMANENT UNDERWAY DEFENCE PROCUREMENT situation and scandalous. But no govt to-date has addressed it. It drains off hundreds of thousands of crores of rupees annually that PMO, Finance Ministry, MOD are complicit in, which the media, the Parliament, the Indian people are completely unaware of. Pity that the correctives sought to be introduced into this system by Parrikar were cut off .
So, where does Ms Sitharaman fit into this circus? Well, you heard of the “mukhota” (mask). In the previous BJP govt. Vajpayee was supposedly the mukhota and, depending on who was speaking, Advani or NSA Brajesh Mishra, was the arch manipulator. Where Sitharaman is concerned it is Jaitley at the MOD controls — she runs frequently across to the North Block, quite literally and, when this is inconvenient, telephonically, clearing virtually every defence decision with him.
In other words, Jaitley is the real Defence Minister who, in turn, defers to the great Wizard residing at 7, Race Course Road, and at the master control with the political override button. Except Modi — the ultimate “political animal” is mostly preoccupied with Amit Shah with winning the next slate of elections (state, 2019 general) and doesn’t do too much micro-managing, trusting that the guidelines verbally issued to Jaitley will be strictly followed.