CAG report criticises the Indian Air Force, Navy and Coast Guard for poor expenditure management

ET Bureau Sep 9, 2011, 03.15am IST

http://articles.economictimes.indiatimes.com/2011-09-09/news/30135612_1_capital-expenditure-cag-report-coast-guard

NEW DELHI: The CAG report on defence services has rapped the Indian Air Force, Navy and Coast Guard for poor expenditure management, exemplified by a dramatic jump in capital expenditure in the last quarter of 2009-10.

Capital expenditure, which accounted for 35.06% of the total defence expenditure in 2009-10, includes expenses for acquiring new weapons and ammunition and transforming obsolete stores into modern ones.

In the case of IAF, expenditure under this head increased by nearly 37.49 % from 2007-08 to 2009-10. In absolute terms, capital expenditure rose from 13,492 crore in 2007-08 to 18,551 crore in 2009-10.

The CAG found that "there was a substantial increase in the capital expenditure of IAF in March 2010. It incurred about 26.10% of the capital expenditure in the month alone, and 39.6% in the last quarter of the financial year''.

The Navy presented a more dismal picture. Its capital expenditure increased by 41.14% during 2007-08 to 2009-10, primarily on account of acquisition, construction and upgradation. "Scrutiny of expenditure revealed that there was a substantial incurrence of capital expenditure by the Indian Navy (42.08%) in March 2010 alone, and 54.5% of the capital in the last quarter of the financial year,'' the report said.

"This reflects poor expenditure management by the Navy and is in deviation from the guidance of the finance ministry which enjoins that expenditure during the month of March should be limited to 15% of budget estimates, and the last quarter spending should not be more than one-third of the budget.''

The Coast Guard was the worst villain. CAG's scrutiny showed that there was "a substantial incurrence of capital expenditure (54.5%) by the Coast Guard in the month of March alone, and 59% of the capital in the last quarter of the financial year.''

The CAG also noted that even though the Defence Ministry obtained substantial hikes in the budgetary estimates for the Coast Guard in 2008-09 and 2009-10, about a fifth of the provisions could not be spent.