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19 STANDING COMMITTEE ON DEFENCE (2020-21) (SEVENTEENTH LOK SABHA) MINISTRY OF DEFENCE DEMANDS FOR GRANTS (2021-22) GENERAL DEFENCE BUDGET, BORDER ROADS ORGANISATION, INDIAN COAST GUARD, DEFENCE ESTATES ORGANISATION, DEFENCE PUBLIC SECTOR UNDERTAKINGS, CANTEEN STORES DEPARTMENT, WELFARE OF EX- SERVICEMEN AND DEFENCE PENSIONS (DEMAND NOS. 18 AND 21) NINETEENTH REPORT LOK SABHA SECRETARIAT NEW DELHI March, 2021 / Phalguna , 1942 (Saka) NINETEENTH REPORT STANDING COMMITTEE ON DEFENCE (2020-21) (SEVENTEENTH LOK SABHA) MINISTRY OF DEFENCE DEMANDS FOR GRANTS (2020-21) GENERAL DEFENCE BUDGET, BORDER ROADS ORGANISATION, INDIAN COAST GUARD, DEFENCE ESTATES ORGANISATION, DEFENCE PUBLIC SECTOR UNDERTAKINGS, CANTEEN STORES DEPARTMENT, WELFARE OF EX- SERVICEMEN AND DEFENCE PENSIONS (DEMAND NOS. 18 AND 21) Presented to Lok Sabha on 16.3. 2021 Laid in Rajya Sabha on 16.3.2021 LOK SABHA SECRETARIAT NEW DELHI March, 2021 / Phalguna , 1942 (Saka) CONTENTS PAGE COMPOSITION OF THE COMMITTEE (2020-21)………………………………….(iii) INTRODUCTION ……………………………………………………………………….(v) REPORT PART I Chapter I General Defence Budget………………………………………...... 1 Chapter II Border Roads Organisation………………………………............ 22 Chapter III Indian Coast Guard ………………………………....................... 34 Chapter IV Defence Estates Organisation...................................... 41 Chapter V Defence Public Sector Undertakings........................................ 61 Chapter VI Canteen Stores Department………………………………........... 106 Chapter VII Welfare of Ex-Servicemen........................................................ 112 Chapter VIII Defence Pension..................................................................... 123 PART II Observations/Recommendations........................................... 133 ANNEXURES Minutes of the Sittings of the Standing Committee on Defence (2020-21) held on 17.02.2021, 18.02.2021, 19.02.2021, 9.03.2021 and 15.3.2021………………160 COMPOSITION OF THE STANDING COMMITTEE ON DEFENCE (2020-21) SHRI JUAL ORAM - CHAIRPERSON Lok Sabha 2. Shri Deepak (Dev) Adhikari 3. Kunwar Danish Ali 4. Shri Ajay Bhatt 5. Shri Devusinh Jesingbhai Chauhan 6. Shri Nitesh Ganga Deb 7. Shri Rahul Gandhi 8. Shri Annasaheb Shankar Jolle 9. Choudhary Mehboob Ali Kaiser 10. Prof. (Dr.) Ram Shankar Katheria 11. Smt. (Dr.) Rajashree Mallick 12. Dr. T.R. Paarivendhar 13. Shri Kapil Moreshwar Patil 14. Shri Anumula Revanth Reddy 15. Shri Jugal Kishore Sharma 16. Dr. Shrikant Eknath Shinde 17. Shri Prathap Simha 18. Shri Brijendra Singh 19. Shri Mahabali Singh 20. Shri Kotagiri Sridhar 21. Shri Durga Das Uikey Rajya Sabha 22. Dr. Ashok Bajpai 23. Shri Prem Chand Gupta 24. Shri Sharad Pawar 25. Shri V. Lakshmikantha Rao 26. Shri Sanjay Raut 27. Shri Rajeev Satav 28. Dr. Abhishek Manu Singhvi 29. Shri Kamakhya Prasad Tasa 30. Dr. Sudhanshu Trivedi 31. Lt. Gen. Dr. D. P. Vats (Retd.) SECRETARIAT 1 Smt. Kalpana Sharma - Additional Secretary 2 Dr. Sanjeev Sharma - Director 3 Shri Rahul Singh - Deputy Secretary 4 Smt. Preeti Negi - Assistant Committee Officer INTRODUCTION I, the Chairperson of the Standing Committee on Defence (2020-21), having been authorised by the Committee, present this Nineteenth Report (Seventeenth Lok Sabha) on Demands for Grants of the Ministry of Defence for the year 2021-22 on ‘General Defence Budget, Border Roads Organisation, Indian Coast Guard, Defence Estates Organisation, Defence Public Sector Undertakings, Canteen Stores Department, Welfare of Ex-Servicemen and Defence Pensions (Demand Nos. 18 and 21)'. 2. The Demands for Grants of the Ministry of Defence were laid on 13 February, 2021 in Lok Sabha. The Committee took evidence of the representatives of the Ministry of Defence on 17, 18 and 19 February, 2021. The draft Report was considered by the Committee at their Sittings held on 9 and 15 March, 2021 and was adopted at the Sitting held on 15 March, 2021. 3. The Committee wish to express their thanks to the officers of the Ministry of Defence and representatives of the Services/Organisations for appearing before the Committee and furnishing the material and information which the Committee desired in connection with examination of the Demands for Grants. 4. For facility of reference and convenience, Observations/Recommendations of the Committee have been printed in bold letters in Part II of the Report. New Delhi; JUAL ORAM 15 March, 2021 Chairperson 24 Phalguna, 1942 (Saka) Standing Committee on Defence REPORT CHAPTER I GENERAL DEFENCE BUDGET Introductory The Committee understand that the principal task of the Ministry of Defence is to obtain policy directions of the Government on all Defence and Security related matters and communicate them for implementation to the Services Headquarters, Inter-Services Organisations, Production Establishments and Research and Development Organisations. It is also required to ensure effective implementation of the Government’s policy directions and the execution of approved programmes within the allocated resources. 1.2 The Committee have learnt that the principal functions of all the Departments are as follows: (i) Department of Defence: The Department of Defence is mandated with Defence of India including defence policy. It deals with Inter-Services Organizations, Defence Accounts Department, Coast Guard, National Cadet Corps, Border Roads Organisation, Institute for Defence Studies and Analysis, National Defence College etc. It is responsible for the Defence Budget, defence lands and cantonments, matters relating to Parliament, and defence cooperation with foreign countries. (ii) Department of Defence Production: The Department of Defence Production deals with matters pertaining to defence production, indigenisation of imported stores, equipment and spares, planning and control of departmental production units of the Ordnance Factory Board and Defence Public Sector Undertakings (DPSUs). (iii) Department of Defence Research and Development: Its function is to advise the Government on scientific aspects of military equipment and logistics and the formulation of research, design and development plans for equipment required by the Services. (iv) Department of Ex-Servicemen Welfare: The Department of Ex-Servicemen Welfare deals with all resettlement, welfare and pensionary matters of Ex- Servicemen. (v) Department of Military Affairs: This Department deals with the Armed Forces of the Union namely, Army, Navy and Air Force; Integrated Headquarters of the Ministry of Defence; the Territorial Army; Works relating to the three services etc. The Department promotes jointness among the three Services. 1 Demands for Grants 1.3 There are four Demands for Grants in respect of the Ministry of Defence which the Committee have been mandated to examine. They are:- (i) Grant No 18 – Ministry of Defence (Civil) (ii) Grant No 19– Defence Services ( Revenue) (iii) Grant No 20 – Capital Outlay on Defence Services (iv) Grant No 21 – Defence (Pension) 1.4 The Committee have been informed that approval of Parliament is taken for the 'Gross' expenditure provision under different Demands for Grants. Receipts and Recoveries, which include items like sale proceeds of surplus/obsolete stores, receipts on account of services rendered to State Governments/other Ministries, etc. and other miscellaneous items are deducted from the gross expenditure to arrive at the net expenditure on Defence Services. What is commonly referred to as the Defence Budget is the net expenditure thus arrived at. Defence Services Estimates (DSE) 2021-22 1.5 The Committee learnt that the Defence Services Estimates (DSE) reflects the detailed estimates for the Defence Services and Organizations/Services covered under Grant Number 19 and 20 of the Ministry of Defence. Further, the provision for Defence Services under Demand Numbers 19 and 20 for 2021-22 in the Budget Estimates (BE) is ₹ 3,47,088.28 crore . The Services and Organizations covered under DSE are as follows: i) Army (including National Cadet Corps, Director General Quality Assurance, Military Farms and Ex-Servicemen Contributory Health Scheme) ii) Navy (including Joint Staff) iii) Air Force iv) Defence Research and Development Organization (DRDO) v) Defence Ordnance Factories 1.6 The Committee further learnt that the 'running' or 'operating' expenditure of the three Services and other Departments viz., Defence Research and Development Organisation 2 (DRDO), Directorate General Ordnance Factories (DGOF), Directorate General of Quality Assurance (DGQA), National Cadet Corps (NCC), Military Farms and Ex-Servicemen Contributory Health Scheme (ECHS) are provided under the Demand No. 19- Defence Services (Revenue), which caters for the Revenue expenditure, while the Demand No. 20 viz., Capital Outlay on Defence Services, caters for the expenditure incurred on building or acquiring durable assets. 1.7 The Revenue expenditure includes expenditure on pay & allowances, transportation, revenue stores (like ordnance stores, supplies by Ordnance Factories, rations, petrol, oil and lubricants, spares, etc.), revenue works (which include maintenance of buildings, water and electricity charges, rents, rates and taxes, etc) and other miscellaneous expenditure. The Capital expenditure includes expenditure on land, construction works, plant and machinery, equipment, Tanks, Naval Vessels, Aircraft and Aeroengines, Dockyards, etc. Civil and Pension Estimates (2021-22) 1.8 While examining the subject, the Committee learnt that the requirement for the Civil expenditure of the Ministry of Defence and Defence Pensions are provided in Demand
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