Standing Co Demands F Standing Committee On

Home , Defence Cyber Agency, Indian Armed Forces, Indian Coast Guard, Ordnance Factory Board

STANDING COMMITTEE ON DEFENCE (2019-20)

(SEVENTEENTH LOK SABHA)

MINISTRY OF DEFENCE

DEMANDS FOR GRANTS (2020-21)

GENERAL DEFENCE BUDGET, BORDER ROADS ORGANISATION, INDIAN COAST GUARD, MILITARY ENGINEER SERVICES, DIRECTORATE GENERAL DEFENCE ESTATES, DEFENCE PUBLIC SECTOR UNDERTAKINGS, CANTEEN STORES DEPARTMENT, WELFARE OF EX-SERVICEMEN, EX-SERVICEMEN CONTRIBUTORY HEALTH SCHEME, DEFENCE PENSIONS AND SAINIK SCHOOLS

(DEMAND NOS. 18, 19, 20 AND 21)

FIFTH REPORT

LOK SABHA SECRETARIAT

NEW DELHI

March, 2020/ Phalguna, 1941 (Saka) FIFTH REPORT

STANDING COMMITTEE ON DEFENCE (2019-20)

(SEVENTEENTH LOK SABHA)

MINISTRY OF DEFENCE

DEMANDS FOR GRANTS (2020-21)

(DEMAND NOS. 18, 19, 20 AND 21)

Presented to Lok Sabha on 13.03.2020

Laid in Rajya Sabha on 13.03.2020

LOK SABHA SECRETARIAT

NEW DELHI

March, 2020/ Phalguna, 1941 (Saka)

CONTENTS

PAGE

COMPOSITION OF THE COMMITTEE (2019-20)………………………………….(iii)

INTRODUCTION ……………………………………………………………………….(v)

REPORT

PART – I

Chapter- I General Defence Budget …………………………………….1

Chapter- II Border Roads Organisation ………………………………….30

Chapter- III Indian Coast Guard …………………………………………..45

Chapter- IV Military Engineer Services …………………………………..53

Chapter- V Directorate General Defence Estates ………………………58

Chapter- VI Defence Public Sector Undertakings ………………………75

Chapter- VII Canteen Stores Department ……………………………… 133

Chapter- VIII Welfare of Ex-Servicemen …………………………………..137

Chapter- IX Ex-Servicemen Contributory Health Scheme …………… 154

Chapter- X Defence Pensions …………………………………………….160

Chapter- XI Sainik Schools …………………………………………………165

PART – II

Observations/Recommendations ……………………………….. 173

APPENDICES

Minutes of the Sittings of the Standing Committee on Defence (2019-20) held on 17.02.2020, 18.02.2020, 19.02.2020, 20.02.2020, 21.02.2020 and 12.3.2020…………………………………………………………………………………226

COMPOSITION OF THE STANDING COMMITTEE ON DEFENCE (2019-20)

Shri Jual Oram - Chairperson

Lok Sabha

2. Shri Deepak Adhikari (Dev) 3. Shri Hanuman Beniwal 4. Shri Ajay Bhatt 5. Shri Devusinh J. Chauhan 6. Shri Nitesh Ganga Deb 7. Shri Rahul Gandhi 8. Shri Annasaheb Shankar Jolle 9. Prof (Dr.) Ram Shankar Katheria 10. Smt. (Dr.) Rajashree Mallick 11. Shri Pashupati Kumar Paras 12. Shri Kapil Moreshwar Patil 13. Shri Anumula Revanth Reddy 14. Shri Jugal Kishore Sharma 15. Dr. Shrikant Eknath Shinde 16. Shri Prathap Simha 17. Shri Brijendra Singh 18. Shri Mahabali Singh 19. Shri Kotagiri Sridhar 20. Shri Durga Das Uikey 21. Dr. Kalanidhi Veeraswamy

Rajya Sabha

22. Dr. Ashok Bajpai 23. Shri Prem Chand Gupta 24. Shri V. Lakshmikantha Rao 25. Shri Sanjay Raut 26. Dr. T. Subbarami Reddy 27. Smt. Vijila Sathyananth 28. Dr. Abhishek Manu Singhvi 29. Shri Kamakhya Prasad Tasa 30. Lt. Gen. Dr. D. P. Vats 31. Dr. Sudhanshu Trivedi

SECRETARIAT

1 Smt. Kalpana Sharma - Additional Secretary

2 Dr. Sanjeev Sharma - Director

3 Smt. Preeti Negi - Assistant Committee Officer

INTRODUCTION

I, the Chairperson of the Standing Committee on Defence (2019-20), having been authorised by the Committee, present this Fifth Report (Seventeenth Lok Sabha) on Demands for Grants of the Ministry of Defence for the year 2020-21 on ‘General Defence Budget, Border Roads Organisation, Indian Coast Guard, Military Engineer Services, Directorate General Defence Estates, Defence Public Sector Undertakings, Canteen Stores Department, Welfare of Ex-Servicemen, Ex- Servicemen Contributory Health Scheme, Defence Pensions, Sainik Schools (Demand Nos. 18, 19, 20 and 21)'.

2. The Demands for Grants of the Ministry of Defence were laid on 10 February, 2020 in Lok Sabha. The Committee took evidence of the representatives of the Ministry of Defence on 17, 18, 19, 20 and 21 February, 2020. The draft Report was considered and adopted by the Committee at their Sitting held on 12 March, 2020.

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 5 March, 2020 Chairperson 15 Phalguna, 1941(Saka) Standing Committee on Defence

ABBREVIATIONS

S.No. Abbreviations Full Form

1. A&A Aircraft and Aeroengines 2. ACCS Air Command & Control System 3. ACRR Acquisition, Custody Relinquishment Rules 4. AFGIS Armed Forces Group Insurance Scheme 5. AGI MBS Army Group Insurance Medical Branch Scheme 6. ALH Advanced Light Helicopter 7. AMRUT Atal Mission for Rejuvenation and Urban Transformation 8. AMWP Annual Major Works Programme 9. AOA Air Officer-in Charge Administration 10. APP Annual Procurement Plan 11. ARV Armoured Recovery Vehicle 12. ASW Anti-Submarine Warfare 13. ASW SWCs Anti-Submarine Warfare Shallow Water Craft 14. ATGMs Anti-Tank Guided Missile 15. AWP Annual Works Plan 16. AWS Akash Weapon System 17. BDL Bharat Dynamics Limited 18. BE Budget Estimates 19. BEL Bharat Electronics Limited 20. BFE Buyer Furnished Equipment 21. BOCCS Board of Control for Canteen Services 22. BPCL Bharat Petroleum Corporation Limited 23. BRDB Border Roads Development Board 24. BRO Border Roads Organization 25. BTA Basic Trainer Aircraft 26. CA Capital Acquisition 27. CAS Cradle Assembly Shop

28. CB Cantonment Board 29. CBRP Capital Booking Revenue Procedure 30. CCA Central Coordinating Authority 31. CCS Cabinet Committee on Security 32. CDO Central Design Office 33. CDS Chief of Defence Staff 34. CE Chief Engineer 35. CEMILAC Centre for Military Airworthiness & Certification 36. CEO Chief Executive Officer 37. CETFC Chief Engineer and Task Force Commander

38. CFI Consolidated Fund of India 39. CGDA Controller General of Defence Accounts 40. CGE Central Government Expenditure 41. CGO Coast Guard Organisation 42. CII Confederation of Indian Industry 43. CIL Coal India Limited 44. CLAR Cantonment Land Administration Rules 45. CNA Competent National Authority 46. COC Carry Over Capital 47. COCO Company Owned Company Operated 48. COP Chief of Personnel 49. COSC Chief of Staff Committee 50. CPI Consumer Price Index 51. CPI-C Consumer Price Index-Combined 52. CPSU Central Public Sector Undertakings 53. CSD Canteen Stores Department 54. CSN Coastal Surveillance Network 55. DAC Defence Acquisition Council 56. DAD Defence Accounts Department 57. DCB Ditch cum Bund 58. DDR&D Department of Defence Research and Development 59. DEO Defence Estates Officers 60. DFG Demands for Grants 61. DGAQA Directorate General of Aeronautical Quality Assurance 62. DGBR Director-General Border Roads 63. DGDE Directorate General Defence Estates 64. DGOF Directorate General Ordnance Factories 65. DGQA Director General Quality Assurance

66. DGR Directorate General of Resettlement 67. DoD Department of Defence 68. DoDP Department of Defence Production 69. DoESW Dept of Ex-Servicemen Welfare 70. DPSU Defence Public Sector Undertakings 71. DRDC Disaster Recovery Data Centre 72. DRDO Defence Research and Development Organisation 73. DSC Defence Security Corps 74. DSE Defence Services Estimates 75. DSV Diving Support Vessels 76. ECHS Ex-Servicemen Contributory Health Scheme 77. E-in-C Engineer-in- Chief 78. EMC Electromagnetic Compatibility 79. EMI Electromagnetic Interference 80. EPC Engineering Procurement Construction

81. ERV Exchange Rate Variation 82. ESM Ex-Servicemen 83. ESW Ex-servicemen Welfare 84. EVM Electronic Voting Machines 85. EWS Electronic Warfare System 86. FAR Floor Area Ratio 87. FIB Fast Interceptor Boats 88. FMA Fixed Medical Allowance 89. FOJ Fitting Out Jetty 90. FPR Final Project Report 91. FPVs Fast Patrol Vessels 92. FRP Fibre Reinforced Plastic 93. FSI Floor Space Index 94. GBMES Ground Based Mobile Elint System 95. GDB General Defence Budget 96. GDP Gross Domestic Product 97. GJHJ Ganga Jetty and Hooghly Jetty 98. GREF General Reserve Engineer Force 99. GRIHA Green Rating for Integrated Habitat Assessment 100. GRSE Garden Reach Shipbuilders and Engineers Ltd 101. GSE Ground Support Equipment 102. GSL Goa Shipyard Limited 103. GST Goods and Services Tax 104. GTG Gas Turbine Generators 105. HAL Hindustan Aeronautics Limited 106. HDT Heavy Duty Truck 107. HSL Hindustan Shipyard Limited 108. HTT High Temperature Test 109. IACCS Integrated Air Command and Control System 110. ICBRs Indo-China Border Roads 111. ICG Indian Coast Guard 112. ICGA Indian Coast Guard Academy 113. ICS Integrated Communication System 114. IDES Indian Defence Estates Service 115. IOC Initial Operating Capability 116. IOCL Indian Oil Corporation Limited 117. IPV Inshore Patrol Vessels 118. ISO Inter-Service Organisations 119. ISRO Indian Space Research Organisation 120. J&K LI Jammu and Kashmir Light Infantry 121. JCO Junior Commissioned Officers 122. JNNURM Jawaharlal Nehru National Urban Renewal Mission 123. JS Joint Staff

124. KCR Kargil Committee Report 125. KSB Kendriya Sainik Board 126. LCA Light Combat Aircraft 127. LCH Light Combat Helicopter 128. LDP Landing Platform Dock 129. LIC Low Intensity Conflict 130. LIC EWS Low Intensity Conflict Electronic Warfare System 131. LMA Local Military Authority 132. LRF Ladle Refining Furnace 133. LRSAM Long-Range Surface-to-Air Missile 134. LSP Limited Series Production 135. LTD Licence Technical Documents 136. LTEP Long Term Equipment Plan 137. LTRoWP Long Term Roll on Works Plan 138. LUH Light Utility Helicopter 139. LWT Light Weight Torpedo 140. MCMVs Mine Counter Measure Vessels 141. MDL Mazagon Dock Shipbuilders Limited 142. MDMB Mother Dairy Milk Booths 143. MEA Ministry of External Affairs 144. MES Military Engineer Services 145. MF Military Farms 146. MFSTAR Multi-Function Surveillance, Tracking and Guidance Radar 147. MHA Ministry of Home Affairs 148. MHS Modern Hull Shop 149. MIDHANI Mishra Dhatu Nigam Limited 150. MIS Management Information System 151. MMP Mazdock Modernization Project 152. MoDoNER Ministry of Development of North Eastern Region 153. MoRT&H Ministry of Road Transport and Highways 154. MoU Memorandum of Understanding 155. MSAR Maritime Search and Rescue 156. MWS Missile Warning System 157. NCA National Coordinating Agency 158. NCC National Cadet Corps 159. NDA National Defence Academy 160. NHAI National Highway Authority of India 161. NMSARCA National Maritime Search and Rescue Coordinating Authority 162. NSA National Security Advisor 163. NSDC National Skill Development Corporation 164. NV Naval Vessels 165. OEMs Original Equipment Manufacturers 166. OFB Ordnance Factories Board

167. OFs Ordnance Factories 168. OPVs Offshore Patrol Vessels 169. OROP One Rank One Pension 170. PBOR Personnel below Officers Rank 171. POL Petroleum, Oil and Lubricant 172. PSQR Preliminary Services Qualitative Requirements 173. PWC Price Water Coopers 174. QMG Quarter Master General 175. R&D Research and Development 176. R&TD Research and Technology Development 177. RBD Raja Bagan Dockyard 178. RCMA Regional Centre for Military Airworthiness 179. RDA Regular Departmental Action 180. RDO Research and Development Organisations 181. RE Revenue Expenditure 182. RE Revised Estimates 183. RFP Request for Proposal 184. RM Raksha Mantri 185. ROH Repairs and Overhaul 186. RR Rashtriya Rifles 187. RRM Raksha Rajya Mantri 188. RRMI Refurbishment and Replacement of Machinery and Infrastructure 189. RSP Rooftop Solar Plants 190. RSS Rooftop Solar Scheme 191. SA Suspended Animation 192. SACEP South Asia Co-operative Environment Programme 193. SBS Safal Booth Schemes 194. SBS Sarvatra Bridge System 195. SECI Solar Energy Corporation of India 196. SIPRI Stockholm International Peace Research Institute 197. SMT Surface Mount Technology 198. SPS Solar Power System 199. SS Sanik Schools 200. SSA Submarine Section Assembly 201. SSR Standard Schedule of Rates 202. SSS Sainik Schools Society 203. ToT Transfer of Technology 204. TPCR Technology Perspective and Capability Roadmap 205. UGC University Grants Commission 206. UNCLOS United Nations Convention on the Laws of the Sea 207. UPP Under Posting Plan 208. UPSC Union Public Service Commission

209. URC Unit Run Canteens 210. VCoNS Vice Chief of Naval Staff 211. VD Vacuum Degassing 212. VOD Vacuum Oxygen De-carburizing 213. VoP Value of Production 214. VTL Vertical Turning Lathe 215. VVPAT Voter Verifiable Paper Audit Trail 216. WLR Weapon Locating Radar 217. WSPI Whole Sale Price Index

REPORT PART - I

CHAPTER I

GENERAL DEFENCE BUDGET

Introductory

The Committee understand that the principal task of the Ministry of Defence is to frame policy directions on defence and security related matters and communicate them for implementation to the Services Headquarters, Inter-Service Organisations, Production Establishments and Research and Development Organisations. It is required to ensure effective implementation of the Government’s policy directions and the execution of approved programmes within the allocated resources.

1.2 The principal functions of the Departments are as follows:

(i) The Department of Defence deals with the Integrated Defence Staff (IDS) and three Services and various Inter Service Organisations. It is also responsible for the Defence Budget, establishment matters, defence policy, matters relating to Parliament, defence cooperation with foreign countries and co-ordination of all defence related activities. (ii) The Department of Defence Production is headed by a Secretary and 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) The Department of Defence Research and Development is headed by a Secretary. 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) The Department of Ex-Servicemen Welfare is headed by a Secretary and deals with all resettlement, welfare and pensionary matters of Ex- Servicemen.

Demands for Grants 2020-21

1.3 There are four Demands for Grants in respect of the Ministry of Defence. They are as follows:

(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 While examining the subject, the Committee learnt that the requirements for the Civil expenditure of the Ministry of Defence Secretariat, Defence Accounts Department, Canteen Stores Department, Defence Estates Organisation, Coast Guard Organisation, Jammu and Kashmir Light Infantry (J&K LI), Border Roads Organization, etc., and Defence Pensions are provided for in two separate Civil Demands for Grants of the Ministry of Defence, viz. Demand No.18 - MOD(Civil) and Demand No. 21 - Defence Pensions. These are not included in the overall Defence Services allocation of ₹ 3,23,053.00 crore in Budget Estimates 2020-21.

1.5 The Committee further learnt that the 'running' or 'operating' expenditure of the three Services and other Departments viz. Defence Research and Development Organisation (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.

1.6 The Revenue expenditure includes expenditure on pay and 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.

1.7 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 (2020-21)

1.8 The Committee found 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. 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

Civil and Pension Estimates (2020-21)

1.9 The requirement for the Civil expenditure of the Ministry of Defence and Defence Pensions are provided in Demand No. 18- Ministry of Defence (Civil) and Demand No. 21- Defence Pensions.

Demand No.18-Ministry of Defence (Civil)

1.10 The Committee learnt that major components of gross Revenue expenditure in Revised Estimates 2019-20 are CSD (₹ 19,550.67 crores), Defence Accounts Department (₹ 1857.24 crore), Coast Guard Organization (₹ 2,476.07 crores), MoD Secretariat (₹ 235.97 crore), Defence Estates Organisation (DEO) (₹ 497.15 crore) and Jammu and Kashmir Light Infantry (₹ 1,389.30 crore), etc. In the Capital outlay of MoD (Civil) of ₹ 4,977.05 (Net) crore in the Revised Estimates 2019-20, the major allocations are for the Capital outlay on other fiscal services- Customs (₹ 2,600.00 crore), BRO (₹ 2,356.00 crore), Construction of Other and Residential buildings (₹ 12.43 crores and ₹ 6.79 crore) and Miscellaneous Loans for Unit Run Canteen (URC) by CSD (₹ 1.21 crore), etc. The provisions in BE 2019-20, RE 2019-20 and BE 2020-21 under Demand No. 18 are given below: (₹ in crore) BE 2019-20 RE 2019-20 BE 2020-21

Gross Revenue 27270.66 29489.54 29992.00 Capital 6967.85 7227.05 7246.00 Gross Expenditure 34238.51 36716.59 37238.00 Receipts (CSD) (-) 18450.00 19703.00 20208.00 Recoveries (BRO) (-) 2153.36 2300.00 2530.00 Net Expenditure 13635.15 14713.59 14500.00 Demand No. 21- Defence Pensions

1.11 Defence Pensions, under the Ministry of Defence provides for Pensionary charges in respect of retired Defence personnel (including Defence civilian employees) of the three services viz. Army, Navy and Air Force and also employees of Ordnance Factories etc. It covers payment of Service pension, gratuity, family pension, disability pension, commuted value of pension, leave encashment etc. The position of budgetary allocation under this head is as under: (₹ in crore)

BE 2019-20 RE 2019-20 BE 2020-21 1,12,079.57 1,17,810.44 1,33,825.00

1.12 The requirement of ₹ 1,33,825.00 crore for BE 2020-21 has been worked out after taking into account the variation of ₹ 21,745.43 crore over BE 2019-20 (₹ 1,12,079.57 crore) which is mainly due to Dearness Relief announced by the Government and growth in pension. There is also increase in amount of Gratuity, Family Pension, Leave Encashment and Superannuation and Retirement Benefits as a result of increase in number of retirees.

Budget Allocations for 2019-20 for Defence Services:

1.13 As indicated in the General Budget, the provision for Defence Services under Demand Nos. 19 and 20 for 2019-20 in the Budget Estimates (BE) was ₹ 3,25,751.70 crore (Gross) and ₹ 3,05,296.07 crore (Net). The Revised Estimates (RE) have been provided at ₹ 3,36,751.70 crore (Gross) and ₹ 3,16,296.07 crore (Net). On a net basis, the R.E. for 2019-20 has shown an increase of ₹ 11,000 crore over the B.E. 2019-20. The net Revenue budget for BE 2019-20 at ₹ 2,01,901.76 crore has been increased by ₹ 4,000 crore to bring the RE at ₹ 2,05,901.76 crore. In the Capital Outlay, the RE 2019-20 is ₹ 1,10,394.31 crore which is ₹ 7000 crore more than the BE 2019-20 allocation of ₹ 1,03,394.31 crore.

1.14 The Major Head wise position under the Demands is as follows:

(₹ in crore) Demand Major Head B.E. R.E.

2019-20 2019-20

2076- Army 1,44,454.31 1,47,916.64 (Revenue expenditure of Army including NCC and DGQA) 19- 2077- Navy Defence 22,711.71 23,486.71 Services (Revenue expenditure of Navy (Revenue) and Joint Staff)

2078-Air Force (Revenue expenditure of Air 30,601.69 31,251.69 Force) 2079-Ordnance Factories 15653.09 14295.35 (Revenue expenditure of Defence Ordnance Factories) 2080- R&D

(Revenue expenditure of 8936.59 9407.00 DRDO)

20- Capital 4076- Capital Outlay on Outlay on Defence Services Defence Services (Capital expenditure of all Services i.e Army including 103394.31 110394.31 NCC, Navy including Jt. Staff, Air Force, Ordnance Factories, R&D, DGQA)

Total (Gross) 3,25,751.70 3,36,751.70

Receipts/Recoveries 20,455.63 20,455.63

Total (Net) 3,05,296.07 3,16,296.07

1.15 Out of the Revised Estimates of ₹ 3,16,296.07 crore for 2019-20, the provision for Revenue expenditure is ₹ 2,05,901.76 crore, while that for Capital expenditure was ₹ 1,10,394.31 crore.

The major components of the net Capital expenditure of ₹ 1,10,394.31 crore are for Land – ₹ 117.36 crore, Works – ₹ 9,367.45 crore (including Married Accomodation Project), Aircraft – ₹ 26,123.74 crore, Heavy and Medium Vehicles (including DGOF Issues) – ₹ 1,600.72 crore, Other Equipment (including DGOF issues) – ₹ 42,192.19 crore (in respect of the three Services), Naval Fleet – ₹ 15,434 crore, Naval Dockyard – ₹ 4,017 crore and other items ₹ 11,541.85 crore.

Budget Estimates 2020-21

1.16 The Budget Estimates for 2020-21 work out to ₹ 3,43,733.69 crore (Gross) and ₹ 3,23,053 crore (Net). The details of the same are as under:

(₹ in crore)

S.No. Demand Major Head B.E. R.E. BE 2019-20 2019-20 2020-21 2076- Army

(Revenue 1,44,454.31 1,47,916.64 1,50,630.27 expenditure of Army

including NCC and DGQA) 2077- Navy

(Revenue 22,711.71 23,486.71 23,534.75 1. expenditure of Navy 19- and Joint Staff) Defence Services 2078-Air Force (Revenue) (Revenue 30,601.69 31,251.69 31,262.66 expenditure of Air Force)

2079- Ordnance 15653.09 14295.35 15477.53

Factories

(Revenue expenditure of Defence Ordnance Factories) 2080- R&D 9094.48 (Revenue 8936.59 9407.00

expenditure of DRDO) 4076- Capital Outlay on Defence Services

(Capital expenditure

20- Capital of all Services i.e 103394.31 110394.31 1,13,734.00 2. Outlay on Army including Defence NCC, Navy including Services Jt. Staff, Air Force, Ordnance Factories, R&D, DGQA)

Total (Gross) 3,25,751.70 3,36,751.70 3,25,751.70

Receipts/Recoveries 20,455.63 20,455.63 20,680.69

Total (Net) 3,05,296.07 3,16,296.07 3,23,053.00

1.17 The net Budget Estimates of Revenue expenditure for the year 2020-21 ₹ 2,09,319 crore depicts an increase of ₹ 3,417.24 crore when compared with the Revised Estimates for 2019-20.

Likewise, the net Budget Estimates of Capital expenditure for the year 2020-21 is ₹ 1,13,734 crore which shows an increase of ₹ 3,339.69 crore over the Revised Estimates 2019-20.

1.18 A comparison of the Service / Department-wise allocations in RE 2019-20 and BE 2020-21 is given below:

(₹ in crore)

Service/ R.E. % age of B.E. % age of

Deptt. 2019-20 Total 2020-21 Total Budget Budget

Army 1,72,440.73 54.52% 1,78,248.26 55.18%

Navy 48,943.14 15.47% 49,623.03 15.36%

Air Force 74,898.88 23.68% 73,244.57 22.67%

DGOF 1,079.88 0.34% 1,443.10 0.45%

R&D 17,730.78 5.61% 19,327.35 5.98%

DGQA 1,202.66 0.38% 1,166.69 0.36%

Total 3,16,296.07 100.00% 3,23,053.00 100.00%

Note : Net Revenue plus Capital provision has been shown here.

1.19 The Gross Revenue Expenditure in the Budget Estimates for 2020-21 is 66.91 percent of the gross allocation as compared to 67.22 percent in the Revised Estimates 2019-20. The Gross Capital Expenditure in the Budget Estimates 2020-21 is 33.09 percent as against 32.78 percent in the Revised Estimates 2019-20.

1.20 The Net Revenue expenditure in the Budget Estimates for 2020-21 is 64.79 percent as compared to 65.10 percent in the Revised Estimates, 2019-20. The Net Capital expenditure in the Budget Estimates 2020-21 is 35.21 percent as against 34.90 percent in the Revised Estimates 2019-20.

Defence Budget 2020-21: At a glance

1.21 During examination of Demand for Grants 2020-21, the Ministry, through a Power Point presentation before the Committee submitted the following information:

MOD’s BUDGET 2020-21 MOD (₹ 4,71,378 crore) Defence Services Defence Pensions MoD (Civil) Estimates (₹ 1,33,825 crore) (₹ 14,500 crore) (DSE) 28.39%) (3.08%) (Conventionally known as India’s Defence Budget) (₹ 3,23,053 crore) (68.53%)

Defence Budget: At a Glance (₹ in crore) 2019- 2020- 2019- 2020- 2019- 2020-21(BE) Services 20(BE) 21(BE) 20(BE) 21(BE) 20(BE) Revenue Revenue Capital Capital Total Total Army 1,41,501.19 1,46,940.51 29,522.21 32,474.44 1,71,023.40 1,79,414.95 Navy 22,211.71 22,934.75 23,156.43 26,688.28 45,368.14 49,623.03 Air 29,601.69 29,962.66 39,347.19 43,281.91 68,948.88 73,244.57 Force DGOF 50.58 686.60 884.05 756.50 934.63 1443.10 DRDO 8,536.59 8,794.38 10,484.43 10,532.87 19,021.02 19,327.35 Total- 2,01,901.76 2,09,319.00 1,03394.3 1,13,734. 3,05,296.07 3,23,053.00 DSE 1 00 MoD 8,780.66 9,679.00 4854.49 4821.00 13,635.15 14,500.00 (Civil) Total 3,18,931.22 3,37,553.00 Defence Pension 1,12,079.57 1,33,825.00 Grand Total 4,31,010.79 4,71,378.00

1.22 Details of budget provided to the Committee under the Defence Services Estimates in Budget Estimates, Revised Estimates and Actual Expenditure for the last five years and the current year 2020-21 are tabulated as under: (₹ in crore) Years BE BE Allocations RE RE Allocation Actual Projections Projections Expenditure 2015-16 3,56,854.56 3,10,079.60 3,32,373.19 2,93,579.60 2,93,919.45

2016-17 3,72,044.46 3,40,921.98 3,94,705.22 3,45,106.09 3,51,549.83 2017-18 4,34,257.08 3,59,854.12 4,47,253.10 3,74,003.85 3,79,702.34 2018-19 5,24,509.77 4,04,364.71 4,98,984.09 4,05,193.85 4,03,457.27 2019-20 5,35,155.39 4,31,010.79 5,64,185.75 4,48,820.10 3,96,920.59* 2020-21 5,74,314.91 4,71,378.00

*Expenditure is upto January, 2020

Growth of Defence Budget vis-a-vis rate of inflation

1.23 On being asked to furnish details of the growth of Defence Budget, considering the present rate of inflation in terms of Whole Sale Price Index (WSPI) and Consumer Price Index (CPI), the Ministry of Defence submitted the following information:-

“Present annual rate of inflation as per the Economic Survey 2019-20 based on CPI-Combined (CPI-C) inflation increased to 4.1 percent (provisional) in 2019-20 (April to December, 2019) as compared to 3.7 percent in 2018-19 (April to December, 2018). The annual rate of inflation based on monthly Wholesale Price Index (WPI) fell from 4.7 percent in 2018-19 (April to December, 2018) to 1.5 percent (provisional) during 2019-20 (April to December, 2019). Based on Consumer Price index, the inflation stood 7.35 percent (Provisional) in December, 2019 as compared to 2.11 percent in December, 2018. Comparison with the growth of defence budget considering the CPI based inflation as per the Economic Survey is as follows:

Defence Budget 2018-19 2019-20 2020-21 (Actuals)# BE RE (BE) Revenue 1,92,459.59 2,01,901.76 2,05,901.76 2,09,319.00 Expenditure Capital 95,229.06 1,03,394.31 1,10,394.31 1,13,734.00 Expenditure Total 2,87,688.65 3,05,296.07 3,16,296.07 3,23,053.00 Defence Budget % Growth 9.94* 2.14** Inflation Rate 4.10@ (CPI) Annually (%) Actual Increase 5.84% Adjusting Inflation

* Based on increase in RE of 2019-20 over 2018-19 (Actuals). ** Based on increase in BE of 2020-21 over 2019-20 (RE). @ inflation rate April-December, 2019 (Provisional)”

Growth of Defence Budget vis-a-vis Central Government Expenditure (CGE) and Gross Domestic Product (GDP)

1.24 The Committee found that the total Defence Budget (including Miscellaneous and Pensions) is ₹ 4,71,378.00 crore for the year 2020-21, which is 15.49 percent of total Central Government Expenditure and 2.10 percent of GDP for the year 2020-21. Also, Capital Budget of Ministry of Defence for 2019-20 is approximately 28.71 percent of the total capital expenditure of the Central Government Expenditure.

1.25 Data on growth of Defence Budget in comparison to central budget and GDP, in absolute and relative terms, for the last five years is given below: (₹ in crore)

Year Defence Total CGE Def. Exp GDP Def. Exp Expenditure (Actuals) % of % of CGE GDP

2015-16 2.14 2,94,055 17,90,783 16.42 1,37,71,874 (Actual)

2016-17 153,62,386 2.29 3,51,661 19,75,194 17.80 (Actual) (2nd RE) 2017-18 170,95,005 2.11 3,59,854 21,41,973 16.80 (Actual) (1st RE)

2018-19 1,90,10,164 2.12 4,03,457 23,15,113 17.43 (PE)

2019- 2,04,42,233(R 2.20 4,48,820 26,98,552 16.63 20(RE) E)

2020- 2,24,89,420 2.10 4,71,378 30,42,230 15.49 21(BE) (BE)

Note: GDP figures from FY 2015-16 to 2018-19 are as per Economic Survey 2019- 20 (Vol. 2) – Table 1.6-Components of GDP at Current Prices GDP figures for 2019-20 (RE) and 2020-21(BE) are as per Budget at a Glance (2020-21) BE= Budget Estimates, RE=Revised Estimates, PE = Provisional Estimates

1.26 When asked to provide relevant information in regard to the Defence Budget of neighbouring and developed countries vis-a-vis their Central Budget and GDP, the Ministry furnished following information: “A like to like comparison of the data on defence spending vis-à-vis that of other countries is difficult due to lack of uniformity in treatment of different components of expenditure and non-availability of reliable published data. Nevertheless, based on inputs from Stockholm International Peace Research Institute (SIPRI) Military Expenditure Database, data on defence budget in respect of neighbouring countries and some advanced countries, including defence spending as percentage of their GDP and share of government spending, is given below:

[In current US $ Million] 2016 2017 2018 Def. exp. % of % of Def. exp. % of % of Def. exp. % of % of Country GDP govt. GDP Govt. GDP govt. exp exp exp China [216031.3] [1.9] 6.0 [227829.4] [1.9] 5.9 [249996.9] [1.9] 5.5 Pakistan 9973.8 3.6 18.0 11461.3 3.8 17.7 11375.5 4.0 18.5 USA 600106.4 3.2 9.2 605802.9 3.1 8.9 648798.3 3.2 9.0 Russia 69245.3 5.5 14.8 66527.3 4.2 12.1 61387.5 3.9 11.4 UK 48118.9 1.8 4.7 46433.3 1.8 4.6 49997.2 1.8 4.6 Figures in [bracket] are SIPRI Estimates”

1.27 On being specifically asked if the growth of Defence Budget could be termed as negative, the Ministry of Defence submitted following reply: “The amount allocated/expended in respect of Capital Acquisition (Modernization) for last five years is as under: (₹ in crore) Year BE RE MA (Final Grant) Expenditure 2015-16 77,406.69 65,400.00 61,699.39 62,235.54 2016-17 70,000.00 62,719.36 64,953.86 69,396.69 2017-18 69,473.41 68,965.24 68,980.89 72,732.20 2018-19 74,115.99 73,882.95 74,538.54 75,892.85 2019-20 80,959.08 90,179.14 - 72,670.04* 2020-21 90,047.80 - - - * Expenditure is upto December, 2019.

From the above data, it may be seen that from 2015-16 onwards, allocation under Capital Acquisition head has increased by ₹ 12,962.34 crore in absolute terms.”

1.28 When asked the manner in which growth of Defence Budget will impact the modernisation/ acquisition plans of the Forces, the Ministry replied as under:

“Acquisition Wing, being a specialist organization created on the basis of the Kargil Committee Report and recommendations of the Group of Ministers, not only monitors capital expenditure, but also looks after all capital acquisition projects from inception to finality. In addition, the Defence Procurement Board, which is chaired by Defence Secretary and The Defence Acquisition Council headed by Raksha Mantri comprises of all stakeholders, monitors adherence to broad timelines in Defence Procurement.

The modernisation plans of the Forces will proceed as planned. Additional funds will be sought at Supplementary/RE stage as and when required.”

Projections made by the Services

1.29 Details regarding the projections made by the three services, allocations made at BE and RE stage and the expenditure incurred during the last five years, and the projected outlay and BE allocation for 2020-21, separately for Capital and Revenue, are as follows:-

REVENUE (₹ in crore)

Year Service BE RE Expenditure Projected Allocated Projected Allocated 2015-16 Army 1,09,758.22 1,03,315.91 1,04,408.45 1,00,106.78 1,02,847.18 Navy 18,546.58 15,525.64 15,838.30 14,635.18 14,992.04 Air 29,632.28 23,000.09 23,000.09 20,377.09 21,020.95 Force 2016-17 Army# 1,15,561.78 1,12,764.62 1,21,686.11 1,17,925.22 1,16,901.93 Navy 18,502.56 17,424.79 19,348.23 17,813.99 17,136.77 Air 25,728.60 23,655.83 23,817.22 23817.52 22856.44 Force 2017-18 Army$ 1,52,491.22 1,19,961.51 1,29,287.59 1,21,451.80 127507.48 Navy 22,473.64 18,493.82 20,545.47 18,878.93 18715.05 Air 29,147.29 24,802.33 29,746.42 27,209.61 27393.20 Force 2018-19 Army$ 1,51,814.73 1,27,059.51 141456.91 1,29,812.34 1,34,241.38 Navy 23,747.75 19,571.37 24420.58 20,795.04 20,856.23 Air 35,260.79 28,821.27 32407.37 28,105.43 28,291.25 Force 2019-20 Army 1,57,896.23 1,40,398.49 1,52,424.82 1,42,773.83 1,11,859.10 Navy 27,086.29 22,211.71 28,737.09 22,786.71 15,880.05

Air 34,849.50 29,601.69 40,382.40 29,951.69 23,379.75 Force 2020-21 Army 1,65,228.28 1,45,785.88 - - - Navy 32,237.96 22,934.75 Air 43,904.17 29,962.66 Force

(# Includes allotment to NCC, Military Farms, Rashtriya Rifles and ECHS which were shifted to modified Grant -MoD(Miscellaneous) in FY 2016-17, for the purpose of comparison with previous as well as future years. Except for Military Farms and ECHS, other organizations were transferred back to Defence Services Estimates in FY 2017-18. In FY 19-20 Military Farms and ECHS also reverted back to DSE)

($ - Excludes Military Farms and ECHS) Note: Navy includes Joint Staff

CAPITAL (₹ in crore) Year Service BE RE Expenditure Projected Allocated Projected Allocated 2015-16 Army 31,938.67 27,342.42 27,845.33 24,230.47 20,703.70 Navy 26,268.13 25,003.24 25,152.20 19,740.06 19,874.69 Air Force 46,191.96 33,686.75 35,780.78 30,442.15 31,198.32 2016-17 Army# 37,960.18 26,935.81 34,489.90 24,017.86 28,462.11 Navy 30,223.31 22,000.09 22,530.04 19,596.28 19,996.88 Air Force 41,266.41 29,795.42 36,512.95 28,239.86 30,414.79 2017-18 Army$ 42,485.93 25,205.71 40,791.43 25,205.71 27,148.26 Navy 28,591.56 19,348.16 27,717.41 19,348.16 20,118.58 Air Force 62,048.85 33,570.17 52,548.50 33,570.17 34,917.60 2018-19 Army$ 44,572.63 26,815.71 41614.41 26,815.71 27,438.66 Navy 35,695.41 20,848.16 30735.65 20,890.87 21,509.60 Air Force 77,694.74 35,770.17 68579.46 35,770.17 36,451.74 2019-20 Army 44,690.98 29,511.25 46,032.00 29,666.90 19,817.19 Navy 37,220.98 23,156.43 40,123.18 26,156.43 23,050.79 Air Force 74,894.56 39,347.19 81,301.99 44,947.19 37,154.79 2020-21 Army 50,373.60 32,462.38 Navy 45,268.31 26,688.28 Air Force 66,207.29 43,281.91

($ - Excludes Military Farms and ECHS), Note: Navy includes Joint Staff

REVENUE + CAPITAL (₹ in crore) Year Service BE RE Expenditure

Projected Allocated Projected Allocated 2015-16 Army 1,41,696.89 1,30,658.33 1,32,253.78 1,24,337.25 1,23,550.88 Navy 44,814.71 40,528.88 40,990.50 34,375.24 34,866.73 Air Force 75,824.24 56,686.84 58,780.87 50,819.24 52,219.27 2016-17 Army# 1,53,521.96 1,40,675.80 1,69,576.52 141943.08 145364.04 Navy 48,725.87 39,424.88 41,878.27 37410.27 37133.65 Air Force 66,995.01 53,451.25 60,330.17 52057.38 53271.23 2017-18 Army$ 1,94,977.15 1,45,167.22 1,70,079.02 1,46,657.51 1,61,680.78 Navy 51065.20 37841.98 48262.88 38227.09 42,425.13 Air Force 91,196.14 58,372.50 82,294.92 60,779.78 64,743.83 Army$ 1,96,387.36 1,53,875.22 1,83,071.32 1,56,628.05 1,61,680.04 2018-19 Navy 59,443.16 40,419.53 55,156.23 41,685.91 42,365.83 Air Force 1,12,955.53 645,91.44 1,00,986.83 63,875.60 64,742.99 Army 2,02,587.21 1,69,909.74 1,98,456.82 1,72,440.73 1,31,676.29 2019-20 Navy 64,307.27 45,368.14 68,860.27 48,943.14 38,930.84 Air Force 1,09,744.06 68,948.88 1,21,684.39 74,898.88 60,534.54 Army 2,15,601.88 1,78,248.26 2020-21 Navy 77,506.27 49,623.03 Air Force 1,10,111.46 73,244.57

($ - Excludes Military Farms and ECHS)

Note: Navy includes Joint Staff

Additional allocation sought by the Services

1.30 When the Ministry was asked to furnish the details of additional allocation sought by the services and the actual allocation given to them during the last five years, the Ministry submitted as under:

“The details of additional amount sought by the three Services at RE stage and amount allocated are as under:

(₹ in crore) Year Service BE RE Additional amount Allocated Projected Allocated sought in RE 2015-16 Army 1,30,658.33 1,32,253.78 1,24,337.25 1,595.45 Navy 40,528.88 40,990.50 34,375.24 461.62 Air Force 56,686.84 58,780.87 50,819.24 2,094.03 2016-17 Army 1,39,700.43# 1,69,576.52 1,41,943.08 29,876.09 Navy 39,424.88 41,878.27 37,410.27 2,453.39 Air Force 53,451.25 60,330.17 52,057.38 6,878.92 Army 1,45,167.22 1,70,079.02 1,46,657.51 24,911.80 2017-18 Navy 37,841.98 48,262.88 38,227.09 10,420.90 Air Force 58,372.50 82,294.92 60,779.78 23,922.42 Army 1,53,875.22 1,83,071.32 1,56,628.05 29,196.10 2018-19 Navy 36,622.59 50,380.02 37,795.25 13,757.43 Air Force 64,591.44 1,00,986.83 63,875.60 36,395.39 Army 1,69,909.74 1,98,456.82 1,72,440.73 28,547.08 2019-20 Navy 45,368.14 68,860.27 48,943.14 23,492.13 Air Force 68,948.88 1,21,684.39 74898.88 52,735.51

This Ministry proposes requirements projected by Services to Ministry of Finance (MoF) for favourable consideration. While allocating funds, Ministry of Finance analyses past absorption capacity of the Services and the pace of expenditure in the current Financial Year. In addition to this, based on the overall ceilings conveyed by MoF, Ministry of Defence distributes funds among the Services and Organisations under MoD, based on Inter-Services priorities and allocations for critical projects.”

Compromises made or likely to be made due to reduced budgetary allocation

1.31 When asked to furnish the reasons for reduction in the allocation of projected funds to the services as adduced by the Ministry of Defence and Finance, the Ministry of Defence replied as under: “This Ministry proposes requirements projected by Services to Ministry of Finance for favourable consideration. While allocating funds, Ministry of Finance analyses past absorption capacity of the Services and the pace of expenditure in the current Financial Year. In addition to this, based on the overall ceilings conveyed by MoF, Ministry of Defence distributes funds among

the Services and Organisations under MoD, based on Inter-Services priorities and allocations for critical projects”.

1.32 When asked to state the areas where compromises have been made or likely to be made due to reduced budgetary allocation as compared to the projections made by the three Services and other organizations/heads, the Ministry of Defence responded as under: “Under the revenue segment, provision is first made for salary and other obligatory expenses. The balance allocation available is distributed to meet the requirement of stores (including ordnance), transportation (of personnel and stores), revenue works and maintenance, etc.

In so far as the capital segment is concerned, funds are first set aside to meet the projected milestone based liabilities likely to materialise during the year. The remaining allocation is distributed to meet the projected requirement for other items.

The allocated funds are optimally and fully utilized towards operational activities. If required, the schemes are reprioritized to ensure that urgent and critical capabilities are acquired without any compromise to operational preparedness of the Defence Forces.”

Chief of Defence Staff (CDS)

1.33 The Committee in their earlier reports had recommended creation of the post of Chief of Defence Staff for better coordination among the services.

1.34 When asked to provide details regarding projections and actual allocations made during the year 2020-21 for the Department of Military Affairs headed by the CDS, the Ministry submitted as under:

“The tentative demand of grants for FY 2020-21 against establishing and maintenance requirements of Department of Military Affairs (DMA) under Revenue funds is projected as undermentioned. The demands being tentative in nature shall be reviewed at the end of first quarter of the next financial year 2020-21. Request for additional allotments/ re-appropriations shall be subsequently raised, accordingly. Head wise demands under Major Head 2052 – Secretariat General Services, Sub Major Head 00 – Secretariat, Minor Head 090 – Secretariat, Sub Head 65 – Department of Military Affairs is appended below for consideration:-

Heads Detailed Object/ Code Nomenclature/ Rupees Head Head Budget Head (in lakh) 01 Establishment 01/01 Salaries – Pay & Allow 01/01/1/097/78 Pay of Officers 01/01/2/097/79 Pay of Establishment 01/01/3/097/80 Dearness Allowances 1500.00 including Dearness Pay 01/01/4/097/81 Other Allowances 01/02/097/82 Wages 2.00 01/03/097/83 Overtime Allowances 1.00

Major Head - 2052 01/06/097/84 Medical Treatment 30.00 Sub Major Head - 01/11/097/85 Travel Expenses 50.00 00 (Domestic) Minor Head - 90 01/12/097/86 Travel Expenses 60.00 Sub Head - 65 (Foreign) (DMA) 01/13/097/87 Office Expenses 175.00 01/20/097/88 Other Administrative 60.00 Expenses 01/26/097/89 Advertisement & 1.00 Publicity 01/27/097/90 Minor Works 50.00 01/28/097/91 Professional Services 25.00 01/31/097/92 Grants-in- Aid General 50.00 99 Information Technology 99/13/097/93 Office Expenses – 100.00 Information Technology Total 2104.00

The above projections are based on inputs provided by Director (Budget), Department of Defence. The total demand of ₹ 21.04 crore against establishment and maintenance of DMA for FY 2020-21 is submitted for consideration.”

1.35 During oral evidence of the representatives of the Ministry of Defence, the Committee enquired whether creation of the post of the Chief of Defence Staff would

19 lead to better coordination and efficiency of the Services. The CDS, in this regard, replied as under:

“...जो सी.डी.एस. की िनयु ई थी, यह तीनों सेनाों की सहमित के साथ की गई थी। तीनों सेना नौसेना अ, वायुसेना अ और थलसेना अ, आज से तकरीबन एक साल पहले इोनं े एक िया के जरए िमिन ी ऑफ िडफ स को िची िलखी थी िक हम अब सहमित है िक सी.डी.एस. की िनयु की जानी चािहए। उसी के बेिसस पर इसको आगे बढ़ाया गया और सी.डी.एस. की िनयु की गई। म कहना चांगा िक आपस म जो सहमित बनेगी और हम एक साथ िमलकर कारवाई करगे। इस व जो भी कारवाई की जा रही है, वह सबकी सहमित के साथ की जा रही है। साथ ही साथ म यह भी कहना चांगा िक कुछ ऐसी ियाएं आएंगी, िजसम सी.डी.एस. की यह िजेवारी दी गई है िक उसे िडसीजन मेिकंग म रेोिं सिबिलटी तो लेनी पड़ेगी। अगर हम कुछ इंंस िदए गए ह, उन पर अमल करने के िलए हम िडसीजन मेिकंग अपेरेटस बना िदया गया है, उस पर हम अमल करगे।“

1.36 When asked to specify the major roles assigned to CDS, the Ministry of Defence replied as under:

“CDS apart from being the head of the Department of Military Affairs will also be the Permanent Chairman of the Chiefs of Staff Committee. He will act as the Principal Military Advisor to the Raksha Mantri (RM) on all tri-Services matters. The major roles assigned to CDS include: - (a) CDS will administer tri-Services organizations.

(b) Provide integrated inputs of the Services to relevant authorities. Defence Planning Committee has been set up to facilitate a comprehensive and integrated defence planning exercise. CDS will be member of Defence Acquisition Council chaired by Raksha Mantri and Defence Planning Committee chaired by National Security Advisor (NSA).

(d) Bring about jointness in operation, logistics, transport, training, support services, communications, repairs and maintenance, etc of the three Services, within three years of the first CDS assuming office.

(e) Ensure optimal utilisation of infrastructure and rationalise it through jointness among the Services.

(f) Enhance the share of indigenous equipment used by the three Services through preparation of roadmap on indigenization of equipment. He will

set objective targets for indigenization and report achievements on annual basis.

(g) Evaluate plans for ‘Out of Area Contingencies’ as well as other contingencies such as Humanitarian Assistance and Disaster Relief.

(h) Implement Five-Year Defence Capital Acquisition Plan (DCAP), and Two-Year roll-on Annual Acquisition Plans (AAP), as a follow up of Integrated Capability Development Plan (ICDP).

(i) Assign inter-Services prioritization to capital acquisition proposals based on the anticipated budget.

(j) Integrate and rationalize international cooperation plans of the Services, including foreign training, exercises and other exchanges in coordination with the Ministry of External Affairs.

(k) Prepare strategy papers on military matters for consideration of the competent authority.

(l) Bring about reforms in the functioning of three Services aimed at augmenting combat capabilities of the armed Forces.

(m) Prepare for Raksha Mantri an empirical and objective report on annual achievements in jointness during the year in military structures, procurement, operations, logistics and training of the Services.”

1.37 When asked to provide details regarding significant long-term strategic plans to make the CDS more effective and contributory to our Defence Forces, the MoD submitted as under:

“The significant Long Term Strategic Plans includes improving efficiency and fast tracking of cases that have direct bearing on operational readiness, structure and creation of DMA, creation of Joint entities among the Services, integrate and rationalize International Cooperation plans of the Services and prioritize inter-Services capital acquisition proposals based on anticipated budget. Further, an integrated approach and single point advise on military issues to the RM, will help in developing a synergized approach to decision making at the highest level.”

1.38 The Committee desired to be apprised of the tri-commands planned to be raised in the next three years and their contribution to the Forces. In response, the MoD submitted as under:

“(a) The following joint/integrated structures that have been approved by Government will be taken to fruition: -

(i) Defence Space Agency (DSA). (ii) Defence Cyber Agency (DCyA). (iii) Armed Forces Special Operations Division (AFSOD).

(b) In addition, roadmap is being prepared for creation of Tri-Services Air Defence Command and integration of logistics support wherever feasible.

(c) Further integration and jointness on other issues of relevance are being planned and detailed roadmap will be placed before MoD/GOI for approval.”

1.39 As per the newspaper reports, the new Integrated Battle Groups (IBGs) have been tested on the western and eastern fronts for their capability to mobilize fast and hit hard. In this regard, the Committee desired to have details of the budgetary allocation made during the year 2020-21 for augmenting this Group and the perspective plans to reach finality on this restructuring. In this regards, the Ministry of Defence submitted as under:

“The new Integrated Battle Group (IBGs) are presently under ‘Test Bedding’. They are being raised through internal optimization and restructuring to make the Indian Army lean and agile. The overall purpose of IBGs is to make leaner organizations capable of operating at short notice to achieve designed results, whilst at the same time improving the teeth to tail ratio of each IBG and thus result is saving of manpower. Optimization/ restructuring will be carried out within allotted budgetary allocations.”

1.40 When enquired whether new procurements for IBGs have been proposed for Corps of Infantry, Armoured, Artillery, Air Defence, Signals, Engineers and logistics etc. for strengthening the efficacy of the Group and details of the new Budgetary

22 projections for the same, the Ministry replied that necessary strengthening/ restructuring and equipping will be carried out within budgetary allocations.

Defence Budget: Challenges and Reforms

1.41 During their presentation before the Committee, the Ministry submitted following data regarding trends of expenditure by the Ministry of Defence during the last ten years:

Trends in MoD Expenditure (₹ in crore) Year MoD(Civil) Pensions Defence Total Services Estimates 2010-11 3382 37336 154117 194606 2011-12 5194 37569 170913 213673 2012-13 5567 43368 181776 230642 2013-14 5235 45500 203499 254133 2014-15 5960 60450 218694 285005 2015-16 7787 60238 225895 293920 2016-17 15014 87826 248710 351550 2017-18 15143 92000 272560 379703 2018-19 13996 101775 287689 403460 2019-20 (RE) 14713 117810 316296 448820 2020-21(BE) 14500 133825 323053 471378

1.42 During the Power Point Presentation before the Committee during examination of Demand for Grants 2020-21, the MoD highlighted following challenges pertaining to Defence Budget:

(i) Percentage of Capital Expenditure has been reducing continually;

(ii) Increasing Pension Liabilities; and (iii) Share of pensions in Defence Budget has gone up by over 50percent.

1.43 During the oral evidence of the representatives of the MoD, the Committee desired to know as to how the Ministry would address shortfall of approximately ₹ 1,00,000 crore in BE 2020-21 in General Defence Budget. The Defence Secretary responded as under:

“Sir, as has been explained in the presentation, we have got about 9.3 per cent high in the overall budget. But, if we look at defence services, our budget allocation has gone up from ₹ 3,19,000 crore to ₹ 3,23,000 crore. So, there is an increase of ₹ 4,000 crore. There is an increased pressure for pension because of various reasons including increased number of pensioners, increased longevity etc. That is taking a higher increase, in terms of 19.5 per cent increase in the overall budget allocation. There is also added need to make sure that we are able to use the resources available in a more judicious manner. One of the big reforms that Government has taken this year which will start yielding result in course of time is creation of the post of CDS. Through CDS, it has also been planned to bring greater togetherness in the operations of the whole thing. The CDS, Gen. Bipin Rawat is here with us and I will request him also to share some of his visions in this regard. हम पूरी उीद है िक इससे हम अपने रससेज को ादा बेहतर तरीके से यूिटलाइज कर सक गे। हमारा ान यह है िक हम अपनी ऑपरेशनल मता को बढाएं , उसम कोई कमी न होने द।“

1.44 In this regard, the Chief of Defence Staff supplemented as under:

“जैसा बताया गया है िक हमारे पास जो तीन सिवसेज ह – आम, नेवी और एयरफोस, अगर हम तीनों सिवसेज को इंिटेट कर द तो हम कुछ हद तक अपने बजट म सेिवंग ला सकते ह, जैसे हमारे एयर िडफ स एयरफोस की रसपांिसिबी है, लेिकन आम और नेवी भी उसको देखती ह। अगर हम इसको एक साथ इंिटेट कर दगे तो हमारी टेिनंग एक जगह हो सकती है, टेिनंग इंार घट सकता है, लॉिज घट सकता है, मैनपावर घट सकती है। इस तरह से हमारी कोिशश यह है िक एक तरफ से मैन पावर को घटाया जाए या ऑिमाइज िकया जाए, दूसरी तरफ जो हमारी टेिनंग एैबिलशमट्स ह, उनको एकित कर के , हम एक या दो जगहों पर टेिनंग कर। हम कुछ टेिनंग एैबिलशमट्स को ऑिमाइज कर के िडफ स बजट को सही तरीके से इेमाल कर सकते ह।

दूसरे, जो भी ोोरमट करगे, उसकी ायरटाइजेशन अभी सीडीएस के हाथ म है, सेे टरी, डीएमए के हाथ म है। इसम हम तीनों सिवसेज सहमित बनाकर, ायरटाइजेशन के िहसाब से अपने रेवेू बजट का इेमाल करगे और कैिपटल बजट म जो हमारा खच होगा, उसे ायरटी दगे िक िकस तरह हम आगे बढ़ना है। हमारी कोिशश यही रहेगी िक तीनों सिवसेज का एक साथ िमल-जुल कर मॉडनाइजेशन हो, तािक एक सिवस आगे बढ़े और दूसरी सिवस पीछे ना रह सके। इससे हम बजट को सही तरीके से मैनेज कर पाएंगे। इसके अलावा, हम छोटी-छोटी ी ला रहे है, िजनके जरए हम सेिवं ला सक , उसके बारे म हम आगे चचा करगे।“

1.45 In this context, the Secretary (Defence Finance) further submitted as under:

“म इतना ही ऐड करना चांगी िक इस साल हम आरई म पैसा ले आए ह। पहले 2014-15 तक पैसा सरडर करते थे, िफर िजतना पैसा हम बजट म िमलता था, उसका पूरा एपिडचर करते थे। अब हम इस साल एिडशनल फ्स लाए ह - 5,000 करोड़ पये पशन म, 7,000 करोड़ पये कैिपटल म और 4,500 करोड़ पये रेवेू म ए ा लाए ह। यह बीई से ओवर एंड एबव है। हम पहले बीई 2020-21 म खच कर, अगर हम टाइमली खच कर पाएंगे तो आरई के टाइम पर हम और फ्स िमलने के चांसेज ह। िफर हम उसके िलए फाइनस िमिन ी के पास जाएंगे।“

1.46 In the Power Point Presentation before the Committee, the MoD enumerated following steps for mobilizing extra-budgetary resources for Defence:

(i) Defence Renewal Fund for capital acquisitions and border infrastructure. (ii) Self-financing of Married Accommodation Project: 80,000 dwelling at ₹ 30,000-40,000 crore through National Buildings Construction Corporation Limited (NBCC) in next 8 years. (iii) Exchange of land with State Governments/Central Ministries in lieu of land required by Defence.

1.47 During evidence on a specific query, the Defence Secretary elaborated on the above-mentioned steps for mobilizing extra-budgetary resources for Defence as under:

“इसम एक तरफ यह बात है िक हम अपने एपिडचर को कैसे ादा ीमलाइन कर सकते ह। दूसरी तरफ, जैसा जटेशन म भी िदखाया गया है, हम बजट के अलावा, ए ा बजटरी रससेज मोबालाइजेशन के कई नए तरीके ढूंढ रहे ह। उसम तीन सुझाव जटेशन म िदखाए गए थे – एक, िडफ स रुअल फ, िजसम हमारा लै मॉनेटाइजेशन का पोजल है। साथ

ही जो अ रेवेू आते ह, उन के बारे म हम लोगों ने एक पोजल बनाया है और उसके बारे म फाइनस िमिन ी से चचा कर रहे ह।

दूसरा, अभी हर साल हम अपने बजट से मैरड एोडेशन ोजे्स के िलए पैसा देते रहे ह, ोिं क अभी हमारे पास सभी इाइज के िलए, सभी आड फोसज के िलए एिडे ट एोडेशन नहीं है। अभी करीब 80,000 घरों की कमी है, िजसके िलए हमारा यह मानना है िक लगभग हम 50,000 करोड़ पये तक की लागत आ सकती है। इस चीज को अब हम लोग से फाइनिसंग माूल म, िजस तरह से गवनमट कालोनीज िदी म भी बनी ह, उनम जहां पर सरकार के बजट से पैसा न देना पड़े, घर बनाएंगे, िजससे आगे आठ सालों म हमारी लगभग 40,000 करोड़ पये की सेिवंग हो सकती है।

कई जगहों पर हमने रा सरकारों को जमीन लीज पर दे रखी है और कई बार रा सरकार पक के िलए जमीन मांगती है, जैसे कहीं सड़क चौड़ी करनी हो या कोई अ काम। इसम यह देखते ह िक ा उनके साथ जमीन एचज कर सकते ह, िजससे दोनों को फायदा हो। हम और भी अ तरीके ढूंढ़ने के यास कर रहे ह।“

1.48 During oral evidence before the Committee, the Defence Secretary also recounted the reforms in Defence sector: “म कहना चांगा िक बत सारे रफा चल रहेह। उनम से मु दो-तीन के बारे म इस अवसर पर कं गा बाकी चचा के समय जटेशन म भी ुत िकए जाएंगे। रा मंी के अूवल के बाद िडफ स रफा के िलए एक कमेटी का गठन आ है, जो एंग डेिलगेशन ऑफ फाइनिशएल पावस सिवसेज की दी जाएं , उसका रू कर रही है। इससे हम उीद है िक िडिसजन मेिकंग और तेजी से हो सकेगी तथा सिवसेज की ऑपरेशनल कैपेिबिलटी म वृ हो सकेगी। इसके अलावा एक और कमेटी का गठन आ है, िजसम िडफ स ोोरमट मैनुअल और िडफ स ोोरमट ोिसजर के बारे म ा सुधार िकए जाएं , उस पर िवचार करे इसी वष उसकी रडेशन देने का ान है। हम लोगों ने इसी कमेटी के एक सुझाव के बेिसस पर एक नॉन लैेबल िडफ स माडनाइजेशन फंड बनाने के िलए िव मंालय से आह िकया है तािक हम अपने एिडशनल फंड रसोस मोबलाइजेशन कर सक ।“

1.49 On the issue of increasing Defence pension liabilities, the Defence Secretary submitted as under:

“....the reasons for increase of pension are many. One of them is increase in longevity of people, increase manpower over the years for various new platforms that we continue to inculcate, revision of pension scales from time to time, etc. This is a liability today, which is a committed liability as it happens...... The Ministry is very consciously aware of this. This is the biggest challenge in some ways because as was shown in the graph, our pension budget has increased 4-5 times in the last 10 years and everything else dwarfs in comparison. Therefore, this is a very important point.”

1.50 During oral evidence of the representatives of the MoD, the Committee desired to know whether the MoD had a blueprint to address the issue of ballooning pension liabilities in the future. In this regard, the CDS submitted as under:

“I think that is a very important issue that has been raised. It is something which is actually bugging all our minds. We are quite hopeful that with the three Service Chiefs we will be able to come to a conclusion on how to ensure that we can increase the retirement age. If we can increase the retirement age, automatically the pension budget goes down. But we are looking at who all can serve in this extended period. We have identified some areas where this extension can happen. We have asked the Services to identify more. Our intention is to see if we can at least come to 30 per cent of our personnel initially going to that extended age, of 58 and 60 years as is applicable to other forces. At the same time, this jointmanship and integration and other issues that we are bringing in itself will lead to saving of budget not only in terms of manpower resources but we will be able to outsource a lot of issues. Our issue is, can we outsource our maintenance requirements which we could not do because the infrastructure in the country was not developed when the raisings happened after 1962. Today if you look at the way the country has evolved and the way the development is taking place all around, infrastructure has come up everywhere in the country. So, a lot of issues that we are now doing from within our own sources can be outsourced. So, it is through increasing the service span, looking at jointness in seeing that we can optimize resources, and third is seeing how we can outsource some of our services to the private sector, that we intend to save the budget and then use it for modernization.”

1.51 He further deposed as under:

“In our case, what happens is, we are actually a volunteer army but a very large sized Army, which is keeping the men young because we have difficulties on our northern borders and on our western borders. We have got active borders. So, we have to maintain such large armies. But the issue is, how can we control the pension and controlling the pension is that there are some people who are capable of serving younger as we said, and, therefore, why not use their services. Secondly, we are looking at alternate sources of employment for them and we are also looking at a commission, which is called Short Service Commission for officers and similar thing for member. You can use them for a particular time, thereafter give them college education or give them one year study leave to educate themselves and then leave the Army so that they leave not with pension but they get a lumpsum amount so that the person can settle

down thereafter when he goes but he does not become a pension liability on you.”

1.52 The Committee desired to know whether the MoD was looking for rationalizing the number of personnel in the Forces. The CDS submitted as under:

“We are seeing how we can incorporate technology to see if it can supplement boots on the ground. While we understand that, we have active borders on our West and on our North and so we cannot completely do away with our defence forces and the requirement of manpower numbers. But we are seeing as to how we can optimize this through technology. In some of the areas we are trying to make sure that some of the logistic units can be brought down in size. We have already got a study from the Committee of Experts led by Gen. Shekatkar which has given some recommendations and it has started to fructify. We have almost collapsed a large part of our Army Postal Service; we have given it to the P&T Department to move our post. We are closing down our military farms. We have started closing down some of our workshops in peace stations where we feel it can be outsourced. That action has already been taken. There are many more issues on the agenda which gradually we are moving forward, and the other proposals are in the pipeline.”

Other issues

1.53 During deliberations on the DFG 2020-21, issue of jawans being stuck or succumbing to the avalanches was brought up. Such a recent case was also highlighted. In this regard, the Chief of Defence Staff apprised the Committee as under: “एवलांच म जो हमारे जवान कभी-कभी फंस जाते ह, उसके कारण घायल हो जाते ह या उनकी मृु हो जाती है, उसके िलए हमारे पास एवलांच रेु इपमट है और एवलांच आइडिटिफकेशन इपमट भी है। जो भी जवान ऐसे इलाकों म तैनात है, उसके ऊपर यह इपमट लगाया जाता है। अगर वह बफ म दब जाता है तो हम उसकी लोकेशन के बारे म पता लग जाता है। वहां से हमारी एवलांच रेु टीम उसको वहां िनकालने म मदद करती है। िजस पिटकुलर जवान की आप बात कर रहे ह, वहां एक पो है, जहां गुलमग के उस जहां पर बफ तकरीबन 15-20 फुट तक जमा हो जाती है। अपने बंकरों के ऊपर बफ सफाई करने के िलए जब जवान ऊपर चढ़ता है और जवान वहां से िफसल गया और बफ के साथ नीचे चला गया है। वह उस जगह म गया है, जहां हमारी सीमा पािकान के साथ िमली ई है। उसकी लोकेशन हम जानते ह िक वह कहां पर िगरा है, ोिं क उसी तकरीबन 100 गज के इलाके म खाई म िगरा आ है। वहां से उस के शरीर को िनकालने के िलए िकसी और को भेजगे तो उस व वहां पर इतनी ादा बफ है िक और कैजुअिलटी होने काअंदेशा है। इसिलए ऐसे इलाकों म हम बफ िपघलने का थोड़ा इंतजार करना पड़ता है। हमने पािकान को कॉै िकया है

िक हम इस इलाके म सच कर सक , लेिकन इस व वहां सच करने के िलए वह इलाका सेफ नहीं है, ोिं क बार-बार वहां बफ के एवलांच आ रहे ह। जवान की मृु ई है, वह बफ म दबा आ है। उसकी लोकेशन तकरीबन हमको पता है, लेिकन इस व वहां सच करने के िलए जाने म हो सकता है िक और कैजुअिलटी हो जाए। यह कह देना िक वह जवान इस व जीिवत होगा, यह हम सही तरीके से नहीं कह सकते ह। जब तक बॉडी नहीं िमलती है, तब तक हम उसे जीिवत ही मानतेह।

सर,आज जानते ह िक इस हादसे को सवा दो महीने हो चुके ह तो वह जीिवत तो नहीं होगा, लेिकन उसका जो पािथव शरीर है, उसको िनकालने म हम कुछ समय लग रहा है। हमारी तरफ से पूरी संभव कोिशश है िक उसको िनकाला जाए। ऐसे बफले इलाकों म ऐसी मुसीबत को हम झेलना पड़ता है। साल दो साल हमारे ऐसे एक-दो हादसे होते रहते ह। इपमट से हम हर तरह की सिलयत दी गई है िक इस तरह के हादसे न हों, अगर होते ह तो उसकी लोकेशन पता लग जाती है। जहां हम जा सकते ह, वहां कोिशश की जाती है िक वहां जवानों को बचाया जा सके।“ 1.54 The issue of suicides amongst the personnel in the Forces was also raised in the Committee deliberations during Demands for Grants 2020-21. On this issue, the Chief of Defence Staff apprised the Committee as under:

“जहां तक ूसाइड का सवाल है, ूसाइड की िया कुछ हद तक बढ़ती गयी है। हमने देखा है िक पारवारक िववाद के कारण ादातर ऐसा हो रहा है। ऐसा नहीं है िक बॉडर पर तैनात जवान ूसाइड कर रहा है। ूसाइड नीचे के इलाकों म ादा हो रहा है, जहां उसके पास मोबाइल फोन है। घर की समा एकदम से उसके पास पंच जाती है। उसके पास कोई सुझाव नहीं है, कुछ ूसाइड इसिलए भी हो रही ह। हमने बार-बार इस पर डीज की ह और लगातार हम ऐसे जवानों को आइडिटफाई करते ह। हमने काउंसलर िनयु िकए ह जो जवानों के पास जाते ह और उनसे बात करते ह। हम लोग यं उ आइडिटफाई करते ह िक िकसको जरत है और िजसको भी आवकता होती है हम उसको साइकोलॉिज के पास अताल म भी रैफर करते ह। लेिकन अर यह देखा गया है िक जब भी िकसी जवान ने ूसाइड िकया है, उसका हम जब मोबाइल डेटा देखते ह तो पारवारक मुसीबत के कारण ूसाइड िकया गया है।हमारी कोिशश है िक इसको कम से कम िकया जा सके। िपछले कुछ सालों से इसम कमी भी आयी है। कुछ समय आया था जब ूसाइड के केस बढ़े थे, लेिकन उसके बाद हमने कारवाई की और अब ूसाइड नंबस म कमी आयी है।“

CHAPTER II BORDER ROADS ORGANISATION

The Committee have been apprised that the role of Border Roads Organisation (BRO), during peace time, is:

(i) To develop and maintain operational road infrastructure for Armed Forces in Border Areas; (ii) To contribute to the socio-economic development of the Nation with specific reference to the Border States.

In addition to the above roles, the BRO also attends to the following during war time:

(iii) To develop and maintain roads to keep open all Lines of Communication (iv) To execute additional task, as laid down by the Government, contributing to the overall war effort.

Allocations to BRO

2.2 The details of allocation to BRO, made by various Ministries at BE and RE stage and expenditure incurred during last five years are given below:

(₹ in crore) Final YEAR AGENCY BE Allotment Expenditure Allotment MoD (Misc) 3526 3790.87 3881.12 MoRT&H 400 338.00 337.22 MEA 57 40.62 40.51 MHA 74 74.20 72.07 2016-17 MoD 845 602.04 606.01

M DoNER 3 5.00 4.95 Deposit 60 70.15 27.98 Total 4965 4920.88 4969.86

MoD (Misc) 4168.20 4180.69 4239.56 MoRT&H 370.00 320.00 317.90 MEA 35.08 49.75 49.75 2017-18 MHA 101.62 83.15 82.97

MoD 523.60 726.43 725.67 M DoNER 5.00 5.00 5.00 Deposit 70.94 91.55 36.85

Total 5274.44 5456.57 5457.70 MoD (Misc) 4426.16 4860.77 5360.82 MoRT&H 450.00 385.00 362.54 MEA 34.91 42.33 42.33 2018-19 MHA 136.57 183.78 183.92 MoD 510.35 692.21 691.68 M DoNER 5.00 5.00 5.00 Deposit 19.55 112.72 59.56 Total 5582.54 6281.81 6705.85 MoD (civil) 5234.22 5688.91 4384.68 MoRT&H 602.50 411.87 MEA 26.30 12.82 Not 2019-20 MHA 221.12 185.41 yet (Dec) MoD 925.85 694.41 allotted M DoNER 5.57 0.57 Deposit 35.02 71.18 Total 7050.58 57.60.94 MoD (Civil) 5586.23 MoRT&H Not yet allocated 2020-21 MEA MHA MoD M DoNER Deposit Total

2.3 The Committee have learnt that against the BE projection of ₹ 5871.42 crore, ₹ 5,609.50 crore and ₹ 7,128.00 crore in 2017-18, 2018-19 and 2019-20, ₹ 4,168.20 crore, ₹ 5,484.00 crore and ₹ 5,234.22 core, respectively, were allocated to BRO by the Ministry of Defence at BE stage. For 2020-21, ₹ 5,711.23 crore have been allocated at BE stage against the projection of ₹ 8,060.00 crore.

2.4 The details of Capital and Revenue budget allocation and expenditure for the last five years are given below:

(₹ in crore)

Capital Budget Revenue Budget Total Total Year Agency Expenditur Expenditur Expend Allotment Allotment Allotment e e iture 3881.1 MoD (Misc) 2517.53 2587.46 1273.34 1293.66 3790.87 2 MoRT&H 223.00 222.47 115.00 114.75 338.00 337.22 MEA 0.00 0.00 40.62 40.51 40.62 40.51 2016- MHA 73.81 71.81 0.38 0.27 74.20 72.08 17 MoD 580.73 584.71 21.31 21.30 602.04 606.01

Others & 75.15 32.92 0.00 0.00 75.15 32.92 Deposit 4969.8 Total 3470.22 3499.37 1450.65 1470.49 4920.88 6 4239.5 MoD (Misc) 2708.46 2774.47 1472.23 1465.09 4180.69 6 MoRT&H 185.00 183.11 135.00 134.79 320.00 317.90 MEA 0.00 0.00 49.75 49.75 49.75 49.75 2017- MHA 82.15 81.97 1.00 1.00 83.15 82.97 18 MoD 708.90 708.53 17.53 17.13 726.43 725.67

Others & 96.55 41.85 0.00 0.00 96.55 41.85 Deposit 5457.7 Total 3781.06 3789.94 1675.51 1667.76 5456.57 0 5360.8 MoD (Misc) 2028.50 2120.43 2832.27 3240.39 4860.77 2 MoRT&H 270.00 248.10 115.00 114.44 385.00 362.54 MEA 0.00 0.00 42.33 42.33 42.33 42.33 2018- MHA 182.22 182.36 1.56 1.56 183.78 183.92 19 MoD 683.23 683.05 8.98 8.63 692.21 691.68 Others & 117.72 64.56 0.00 0.00 117.72 64.56 Deposit 6705.8 Total 3281.67 3298.50 3000.14 3407.35 6281.81 5 4384.6 MoD (civil) 2321.00 1667.01 2913.22 2717.67 5234.22 8 MoRT&H 462.50 297.26 40.00 114.61 602.50 411.87 2019- MEA 0.00 0.00 26.30 12.82 26.30 12.82 20 MHA 218.82 183.53 2.30 1.83 221.12 185.41 (Dec) MoD 912.50 689.51 13.35 4.90 925.85 694.41 Others & 40.59 71.75 0.00 0.00 40.59 71.75 Deposit 5760.9 Total 3955.41 2909.06 3095.17 2831.88 7050.58 4 MoD (civil) 2300.00 - 3286.23 - 5586.23 - MoRT&H MEA 2020- MHA 21 Not yet allocated. MoD

Others & Deposit Total 2300.0 - 3286.23 - 5586.23 -

2.5 When specifically asked to explain as to how the Ministry of Defence has been able to maintain Border Roads in the wake of inadequacy of funds being faced from time to time, the Ministry through a written note replied as under:

“Resurfacing works are prioritized by DGBR as per the availability of funds to BRO.”

Additional allocation sought by BRO

2.6 The details of additional allocation sought by BRO from Ministry of Finance during the last five years were provided to the Committee which are given below:- (₹ in crore)

Year BE Demand for Demand for 2nd Final Additional fund allocation 1st batch of batch of allocation allocated with supplementa supplementary reference to BE ry allocation

2015-16 3481.00 1096.00 350.20 3316.22 (-) 165.00

2016-17 3526.00 1420.00 2433.27 3790.87 264.87

2017-18 4168.20 2309.11 181.00 4180.69 12.49

2018-19 4426.16 - 1162.84 4860.77 434.61

2019-20 5234.22 731.78 - 5688.91 454.69

2.7 The Ministry was asked to state the areas where compromises have been made or likely to be made due to reduced budgetary allocation against the projections made by the BRO. In a written note, the Ministry apprised the Committee as under:

”Several steps have been taken to achieve the targets within the allocated funds. After the transfer of BRO from MoRT&H to MoD since 2015, there has been a gradual increase in allocation of funds to BRO as mentioned below:-

Year Allocation (in crore)

2016-17 3790.87

2017-18 4180.69

2018-19 4860.77

2019-20 5680.91

Further, in order to increase the pace of expenditure and BRO’s absorption capacity the following steps have been taken:-

(a) Guidelines for preparation of AWP and APP: In order to prioritize the Annual Works Plan and to make it more realistic with reference to the budget availability, new policy guidelines for preparation of AWP and APP have been issued.

(b) Enhanced Delegation of Administrative and Financial Powers: The main objective of enhanced delegation of powers right upto the level of Chief Engineer and Task Force Commander is to bring transformational changes in the organization in order to improve the pace of execution of works to meet the requirement of the Armed Forces and to avoid delays on account of references between the Chief Engineer and HQ DGBR and also between HQ DGBR and MoD.

(c) Engineering Procurement Contract (EPC) Mode of execution: In order to enhance the capacity of BRO and to ensure the completion of various roads projects in the border areas as per the requirement of the Army, guidelines for adoption of EPC mode of execution have been issued by the Ministry, so that BRO is able to outsource road projects to big companies.

(d) Delinking of salary of BRO personnel from works has been approved.”

Required and existing number of equipment with BRO

2.8 The details of requirement and existing equipment of BRO for the last five years are given below:- “The details of requirement and existing equipment of BRO for the last five years are given below:-

Type of FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 Equipme Require Require Require Require Require nt Held Held Held Held Held ment ment ment ment ment Dozer–II Equivale 1797 1458 1702 1394 795 1261 1278 1230 1457 1317 nt Stone crusher 721 177 995 385 316 298 279 327 280 324 all types Road 908 777 1215 984 543 737 595 813 557 807 Roller Air Compre 1412 1107 1182 872 546 710 1158 1087 713 1123 ssor Hot Mix 192 91 166 104 82 100 84 117 84 113 Plant Wet Mix 46 38 66 36 28 38 18 39 16 38 Plant Paver 238 156 230 155 108 150 103 151 102 146 Finisher Tippers 6263 3758 9913 4178 4561 3978 6348 4912 5266 4964

Accordingly, based on the requirement an Annual Procurement Plan (APP) amounting to ₹ 168.90 crore has been approved for FY 2019-20. The status of procurement of critical equipment is given as below:-

FY 2019-20 Qty approved for Remarks Type of Equipment procurement in APP Requirement Held 2019-20 (in numbers) 90 Procured Dozer–II Equivalent 1457 1317 NIL - Air Compressor 713 1123

Tippers 5266 4964 150 Procured

2.9 When asked to delineate the steps taken to fill the gap between required and existing equipment with BRO, the Ministry replied as under:

“Earlier, the approval for procurement of equipments was based on the approved five year Long Term Equipment Plan which was not realistic with reference to the allocation of budget to BRO. Accordingly, Policy guidelines for preparation of Annual Works Plan (AWP) and Annual procurement plan (APP) with reference to fund allocation to BRO has been issued vide this office letter

dated 19 June 2017, so that the planning of works and the requirement of resources i.e. the size of APP is more realistic.

Further, in order to induct the latest Vehicles/Equipment/Plants (V/E/P) in BRO and to complete the preparatory action for timely procurement, enhanced delegation of powers for procurement of both indigenous and foreign construction equipments has been accorded to DGBR.”

Construction of Roads by BRO

2.10 In regard to construction of roads by BRO in difficult and rough terrain, the Ministry of Defence in a written reply submitted:

“In order to concentrate simultaneously on the Northern and North-Eastern Borders and for the holistic development of roads in border areas, a five year (2018-23) Long Term Roll on Works Plan (LTRoWP) has been approved for the construction/improvement for 265 roads of length 14224.12 km, 4 Ditch cum Bund (DCB) of length 353.22 km and 4 bridges (Br). As such there is no specific definition for border roads and all roads strategically important approaching to border and approved in the LTRoWP may be considered for border roads. The state wise details are given below:-

Nos. of Length Remarks S/No State roads (in km) a Arunachal Pradesh 3173.82 (including 1 Br) 62

b Himachal Pradesh 07 567.64 UT of Jammu & (including 2 DCB of c 61 2295.63 Kashmir length 139.87km) (including 1 Br) d UT of Ladakh 44 3185.95

e Manipur 09 520.61

f Nagaland 02 251.25

g Uttarakhand 24 936.55

h Andaman & Nicobar 01 23.94

i Bhutan 08 550.99

j Mizoram 08 589.63 (including 2 Br and 2 k Punjab 06 250.13 DCB of length 213.35 km)

l Rajasthan 23 1630.04

m Sikkim 18 601.18

Total 273 14577.33

Cost of Construction of Roads

2.11 As regards the comparative cost of construction as well as maintenance of roads by BRO and National Highways Authority of India (NHAI), the Ministry of Defence submitted as under:-

“The project cost depends upon various factors such as terrain, geographical area, geological aspect, traffic plying on the stretch, number of cross roads, number and size of structure, availability of construction material, distance for transporting the construction materials and standard schedule of rate. Therefore, it is very difficult to arrive at a normative cost of construction for various lane configurations across the country. However, the cost of construction of roads by BRO and Ministry of Road Transport and Highways (MoRT&H) is given below:-

Hilly terrain rate per km (in crore) Description of work BRO MoRT&H New double lane road 9.86 10.11 Improvement to double lane 6.64 6.73 specification

The cost of maintenance for various types of roads and terrain in BRO and MoRT&H is given below:-

Rate in Type of BRO (in Type of road Rate in MoRT&H (in lakh) km/year terrain lakh) km/year In case of MoRT&H, most of the Class-9 Hilly 2.88 works are executed on EPC mode

Intermediate wherein as per the contract the 4.21 width maintenance of road is to be done for a period of five year at a cost of Double Lane 4.98 2.5 % of the civil cost.

Status of roads in difficult area like Uttarakhand, J&K, Ladakh and North East region

2.12 The Committee have been informed that out of the 273 roads of length 14577.33 km, identified by the Army for construction/improvement, 24 roads of length 936.55 Km are in the state of Uttarakhand, 61 roads of length 2295.62 Km are in J&K, 44 roads of length 3185.95 km are in Ladakh and 100 roads of length 5610.43 km are in the North Eastern Region (excluding roads in Bhutan. The status of roads in difficult areas is as under:

State Number of Length Work completed roads (in Km) (in Km) UT of J&K 61 936.55 192.75 UT of Ladakh 44 2295.22 661.81 Uttarakhand 24 3185.95 1666.30 NE Region 100 5160.43 1838.29 Total 229 11578.15 4359.15

Status of Indo-China Border Roads (ICBRs)

2.13 The Ministry of Defence submitted the status of ICBRs in a written reply, which is as under:-

State No. of Revised Work Connectivity roads approved completed achieved (km) Length (in Km) (in Km) Arunachal Pradesh 27 1725.46 1315.10 1672.94 Himachal Pradesh 5 116.99 103.63 116.99 Jammu & Kashmir 12 1064.14 878.20 1064.14

Uttarakhand 14 355.00 147.87 323.94 Sikkim 3 61.98 41.64 61.98 Total 61 3323.57 2486.44 3239.99 % 75% 98% Note: (i) The approved length has reduced from 3323.57 km to 3290.32 km.

(ii) Only 50.32 km of road length on 4 roads is required to be connected.

Challenges faced in execution of projects and difficulties in maintenance of roads

2.14 The Ministry enumerated followings reasons for certain delays in execution of road projects:-

(a) Delay in Forest/Wildlife clearance

(b) Hard rock stretches

(d) Difficulties in availability of construction material

(e) Due to natural disaster resources are diverted

(f) Delay in land acquisition

(g) Poor performance of contractors

(h) Non availability of local labour

2.15 When asked to enumerate the difficulties faced by BRO in maintenance of existing roads, the Ministry submitted as under:

(a) Adverse and harsh climatic conditions. (b) Non availability of sufficient labour. (c) Limited working season. (d) Repeated damages due to landslides, natural calamities i.e. flash floods and cloud burst. (e) Non allocation of stone/sand quarries by the State Governments.

(f) Weak geological strata especially in North Eastern region causing sinking/formation breaches. (g) Due to insurgency affected areas.

In order to facilitate the maintenance of existing roads, DGBR has been delegated powers to fix/revise the rates for maintenance and snow clearance grants for roads entrusted to BRO for maintenance and outsource maintenance of roads.

2.16 The Ministry, in reply to a question, informed the Committee of the following steps taken for early construction of roads in border areas:

“To overcome the various impediments and to expedite the construction of roads in the border areas, the following measures have been taken:-

(c) Engineering Procurement Construction (EPC) Mode of execution: In order to enhance the capacity of BRO and to ensure the completion of various roads projects in the border areas as per the requirement of the Army, guidelines for adoption of EPC mode of execution have been issued by the Ministry, so that BRO is able to outsource road projects to big companies.

(d) State Governments of Sikkim, Arunachal Pradesh, J&K, Himachal Pradesh and Tripura have constituted the Empowered Committee to resolve the various issues of BRO.”

2.17 During their Power Point Presentation before the Committee, the Ministry of Defence submitted that following reforms and initiatives are being undertaken:

(i) Raising of 2xADG HQ (2016) (ii) Disbandment of Base Workshops and Store Depots (under process) (iii) Adoption of Detailed Project Report (DPR) methodology for development of roads (2016) (iv) Engineering, Procurement, and Construction (EPC) Mode of Construction for Projects more than ₹ 100 crore (2017) (v) Relaxation in Twin Criteria for downgradation of Vehicles/Equipment/Plants (2017) (vi) Revision of Equipment Output Norms (2019) (vii) Enhancement of Financial and Administrative Powers (2017) (viii) Delinking of Pay and Allowances from cost of work estimates (2018)

Shortage of Manpower

2.18 The Ministry, in reply to a question, submitted the following information with regard to the required (authorized) and existing force level of BRO:-

Authorized force level Existing force level Officers Subordinates Total Officers Subordinates Total 2426 39174 41600 1791 31718 33509

2.19 When asked to specify as to what measures are being taken/contemplated to address the shortage, if any, in manpower, the Ministry of Defence replied as under:

“Due to the change in construction philosophy from departmental construction to EPC mode of execution, against the authorization of 41600 posts, 9082 posts are required to be rationalized pertaining to 11 Non-core positions in a phased manner. Further, BRO has taken the following measures to fill the vacancies as mentioned below:- (a) 1655 vacancies have been advertised and the recruitment is under process in phased manner at General Reserve Engineer Force (GREF) Centre.

(b) Demand for 2046 vacancies for different posts to Staff Selection Commission (SSC) for the year 2019 have been placed and 118 vacancies against compassionate appointment is also under process.”

Other relevant issues

2.20 The Committee found that certain projects of Indo-China Border Roads were given to Border Roads Organisation (BRO) and desired to know the rationale behind such a change keeping in view the fact that BRO is already overburdened with their ongoing Projects. The Ministry replied as under:

“Earlier, the Government in 2006, entrusted BRO with the construction of 61 roads of length 3323.57 km. These roads were entrusted to BRO as these roads were located in difficult terrain and adverse climate where BRO has expertise/experience to construct roads in such areas. Further, it is mentioned that no additional ICBRs has been entrusted to BRO and no ICBR has been handed over by BRO to any other agency since 2006.”

2.21 The Committee found that the Service rules of Border Roads Organisation (BRO) are quite old and have not been changed for the last 20 years. In this regard, the MoD submitted as under:

“Officers and subordinates of BRO are governed by Central Civil Service (CCS) Rules. In addition to these rules, certain Departmental Rules, which are BRO specific, have been compiled under Border Road Regulations (BRR), which was last revised in 1993 and are under revision.”

2.22 To a query of the Committee pertaining to any plans to install satellite dish for better satellite monitoring of the Projects, the Ministry has responded as under: “There are no plans to install satellite dish, however, Geographic Information System (GIS) based digitization of road infrastructure software for the roads in the border areas to monitor the progress in the Border States is under progress, which is likely to be completed by 2020.”

2.23 As regards the availability of sufficient material to BRO for laying the roads, the Ministry of Defence submitted as under:

“The Empowered Committee has been constituted in Arunachal Pradesh, Sikkim, Uttarakhand, Manipur, U T of Jammu and Kashmir and Tripura to resolve the issues related to Land Acquisition, Forest and Wild life clearances and allotment of stone/sand quarries for construction of roads.

In Arunachal Pradesh, at present out of 128 quarries proposed by BRO the State Government has notified 60 quarries for BRO.

Further, to reduce the carbon foot prints due to optimal utilization of quarry material new technology as mentioned below are adopted for construction of roads:-

(i) Use of Geo Textiles in Pavement Construction

(ii) Cementitious Base for construction of Pavements.” 2.24 During oral evidence of the representatives of the Ministry of Defence, the Committee desired to know about the steps being taken to cope with the Environmental/Wildlife Clearance, the Director General, Border Roads deposed as under:

“सर, िजतने भी एनजीटी के नॉ ह, वे हम फॉलो कर रहे ह। पहले तो जहां कं न करते ह, वहां पर हम यह करते ह वहां पर slope stabilization and muck disposal करते ह। Even for muck disposal, the sites are approved by the National Green Tribunal (NGT). We cannot dump the muck anywhere we like. We are not violating any norms. Even in the Char Dham, a high-powered Committee under Dr. Chopra has been nominated by the Supreme Court to identify all the norms and pass directions to us.”

2.25 He further added as under:

“The delays are mostly because of forest clearance and land acquisition. Since land is a State subject, it sometimes becomes difficult. सर, लै एिजशन और फॉरे यरस नहीं हो रहे ह।“

2.26 In its written reply, the MoD enumerated various measures which have been adopted for quick and time bound disposal of forest clearance cases by Ministry of Environment and Forests:

“(i) Single window system has been established at District, State and MoEF levels to fast track processing of forest clearance cases on 09 July, 2010. (ii) Simplified and unified proforma adopted for processing both forest and wild life clearance simultaneously. (iii) A Working Group has been constituted on 03.06.2013 by Ministry of Environment and Forest (MoEF) under the Chairmanship of Secretary MoEF to review the forest clearance cases. (iv) MoEF vide letter No 11-246/2014-FC dated 4th July 2014 has accorded general approval under Section (2) of the Forest (Conservation) Act, 1980 for

43 diversion of forest land in the States of Arunachal Pradesh, Himachal Pradesh, Uttarakhand and Sikkim, as per details given below :- (a) Construction and widening of two lane roads by the BRO and other road construction agencies entrusted with the job by the Ministry of Defence, in the area falling within 100 kilometers aerial distance from the Line of Actual Control (LAC); and

(b) Widening of road (by the BRO and other road construction agencies) which are identified by the Ministry of Defence as link roads between Border Roads in the area within 100 kilometer aerial distance from the LAC and National Highways/State Highways/other State Roads, subject to fulfillment of the conditions. (v) In addition to above, MoEF vide letter No.11-246/2014-FC dated 4th July, 2014 has accorded relaxation for diversion of forest land, for non forest purpose-special provision for creation of compensatory Afforestation, in lieu of forest land diverted for creation of strategic defence projects being taken up within 100 km aerial distance from the Line of Actual Control by any user agency identified by the Ministry of Defence. At present no critical road projects is affected due to forest clearance. However, 25 proposals are under process with various State Governments. Further, no road projects is pending for want of Environmental / Wildlife clearance.”

CHAPTER III INDIAN COAST GUARD

The Committee have learnt that Indian Coast Guard (ICG) came into existence on February 1, 1977 with two frigates and five patrol boats transferred from the Indian Navy and was formally instituted on August 19, 1978. Since its inception, the service has acquired a wide range of capabilities, both surface and airborne, to undertake the assigned tasks during peace time and to supplement the efforts of the Indian Navy.

3.2 The Command and Control of Coast Guard organization lies with the Director General Indian Coast Guard (DG, ICG), New Delhi. The organization has 5 Regional Headquarters located at Gandhinagar, Mumbai, Chennai, Kolkata and Port Blair which have been further sub-divided into 16 Coast Guard Districts HQs covering the entire coastline of India. There are 42 Coast Guard Stations, 10 Coast Guard Air Stations and Air Enclave for undertaking effective deployment of ships and airborne operations.

3.3 The duties and functions of Indian Coast Guard are as follows:

(a) Ensuring the safety and protection of the artificial islands, offshore terminals, installation and other structures and devices in any maritime zone.

(b) Provide protection to the fishermen including assistance to them at sea while in distress.

(c) Taking such measures as are necessary to preserve and protect the Marine Environment and to prevent and control marine pollution.

(d) Assisting the Customs and other authorities in Anti-Smuggling Operations.

(e) Enforcing the provision of such enactments as are for the time being in force in the maritime zones; and

(f) Such other matter, including measures for the safety of life and property at sea and collection of scientific data, as may be prescribed.

3.4 The Committee have found that Indian Coast Guard has also been assigned the additional duties of enforcement, monitoring and surveillance of Deep Sea Fishing, Search and Rescue for mariners and Marine oil-spill response measures. ICG also provides coastal security in territorial waters in coordination with central and state agencies and it is the Lead Intelligence Agency for coastal and sea borders.

3.5 At present, Indian Coast Guard is equipped with 62 ships, 61 Interceptor Boats, 18 hovercraft and 63 aircraft.

Force Level

3.6 On a query of the Committee, the Ministry of Defence, in a written submission, apprised the Committee of the existing force level:

“Indian Coast Guard envisages a force level of 200 ships/boats and 100 aircraft by the year 2025. The existing force level of the Indian Coast Guard is as tabulated below:

Year S.N Details Remarks 2009 2015 2020 42 ships decommissioned (a) Ships 61 104 145* since 2009 (b) Aircraft 47 62 62** - (c) Stations 21 42 42 - The main armament includes Main 76 mm Super Rapid Gun (d) 29 55 72*** Armament Mount (SRGM), 40/60 and 30 mm CRN-91

* 25 Ships and 20 Boats are under construction at various shipyards. ** 16 Advanced Light Helicopters are scheduled for delivery commencing March 2020. *** Armament induction forms part of ship/aircraft induction”.

3.7 As per submission of the Ministry of Defence, the acquisition process to build up the planned force level is progressing satisfactorily. Following projects will facilitate timely materialization of targeted force levels:

(a) 25 Ships and 20 Boats are under construction at various shipyards.

(b) 16 Advanced Light Helicopters are scheduled for delivery commencing March 2020.

(d) Acceptance of Necessity (AON) for 12 Twin Engine Heavy Helicopters has been accorded by Government.

Budget 2020-21

3.8 During the Power Point Presentation before the Committee, the representative of the Indian Coast Guard furnished following information regarding budget for the Financial Year 2019-20 and 2020-21: (₹ in crore) FY BE BE SHORTFALL RE RE SHORTFALL PROJ. PROJE. FY 2019-20 Revenue 946.72 885.27 1084.39 1030.28 (Sal) 373.63 479.87 Revenue (13.5%) (16.23%) (Non 1812.58 1500.00 1871.55 1445.79 Sal) 3330.00 1030.00 Capital 5830.00 2500.00 3630.00 2600.00 (57.12%) (28.37%) 3703.63 1509.87 Total 8588.90 4885.27 6585.94 5076.07 (43.12%) (22.93%) FY 2020-21 Revenue 1124.43 1032.76 (Sal) 713.27 Demands at RE Moderated and Revenue (21.97%) 2121.60 1500.00 are bare Essential for Meeting (Non Targets

Sal)

2850.00 Capital 5350.00 2500.00 (53.27%) 3563.27 Total 8596.03 5032.76 (41.45%)

3.9 The details regarding the projections made by the Coast Guard, allocations made at BE, RE and actual during the last five years are as follows:

(₹ in crore) BE BE RE RE Actual Year Head Projection Allocation Projection Allocation Expd. Capital 1550.00 1550.00 1491.73 1140.00 1142.08 2014- 15 Revenue 1278.97 1130.26 1465.21 1265.00 1286.78 Total 2828.97 2680.26 2956.95 2405.00 2428.86 Capital 2050.00 1200.00 2460.00 1500.00 1516.84 2015- 16 Revenue 1642.86 1314.00 1625.78 1514.00 1517.18 Total 3692.86 2514.00 4085.78 3014.00 3034.02 Capital 3990.00 1500.00 3005.00 2500.00 2468.97 2016- Revenue 1798.58 1624.41 2085.99 1737.76 1773.25 17 Total 5788.58 3124.41 5090.99 4237.76 4242.22 Capital 4805.00 2200.00 4150.00 2200.00 2178.59 2017- Revenue 2214.55 1829.79 2314.27 2148.97 2155.51 18 Total 7019.55 4029.79 6464.27 4348.97 4334.11 Capital 4950.00 2700.00 3555.00 2250.00 2260.49 2018- 19 Revenue 2408.41 2091.42 2625.02 2391.42 2451.14 Total 7358.41 4791.42 6180.02 4641.42 4711.63 Capital 4350.00 2500.00 3630.00 2600.00 1656.34 2019- Revenue 2891.00 2385.27 2955.94 2476.07 1975.89 20 Total 7241.00 4885.27 6585.94 5076.07 3632.23*

2020- Capital 5350.00 2500.00

21 Revenue 3246.03 2532.76 Total 8596.03 5032.76

* Actual Expenditure upto 31.12.2019

3.10 The Secretary (Defence Finance), on the issue of budget allocation to Coast Guard, deposed as under:

“Sir, Coast Guard is a part of the civil budget. So, we have an overall limit of the civil budget. The Ministry of Finance did not agree to give any additional money to the Coast Guard in the RE because their pace of expenditure was very low. अभी भी इनका िसफ 75 ितशत बजट खच आ है। Keeping that in view, वैसे भी अब िमिनी ऑफ फाइनस क िलिमट लग गई है क लाट ाटर म हम िसफ 25 ितशत पैसा खच कर सकते ह। लाट ाटर भी खम होने वाला है, लाट मथ म िसफ 10 ितशत पैसा खच कर सकते ह। इस तरह से इनका पूरा पैसा इस साल खच ही नह होगा। यह एक कारण है क इनको इस साल एिडशनल फस नह िमले ह। “

Manpower

3.11 The Committee have been apprised that at present, total manpower strength with Coast Guard is 14,313 comprising of 1982 officers, 10997 Enrolled Personnel and 1334 Civilians.

Details 2009 Present Accretion

Officers 789 1982 1193

Enrolled 5518 10997 5479 Personnel Civilians 847 1334 487

Total 7154 14313 7159

3.12 When asked to specify the measures taken to address the shortage, if any, regarding manpower in Coast Guard, the MoD replied as under:

“Following proactive steps have been taken towards liquidation of manpower shortage against sanctioned strength:-

(i) Re-employment of Naval Short Service Commissioned officers at Comdt (JG) rank.

(ii) Seeking deputation of officers from Indian Navy.

(iii) Induction of Commercial Pilot (CPL) holders as pilots under Short Service Appointment (SSA) scheme.

(iv) Introduction of Short Service Appointment (SSA) Lady Officers Entry Scheme.

(v) Online applications for Recruitment of officers and enrolled personnel.

(vi) Audio visual and print advertisements for publicity to generate awareness amongst general masses.

(vii) Preliminary selection undertaken at 06 different locations in respect of officers to garner maximum candidates.

(viii) Enrolled personnel are recruited from all over country by deputing selection Committees at various places.

(ix) Special recruitment drive for induction of SC/ST candidates.

(x) Lectures being conducted at various Schools/ Colleges to create awareness amongst youth for joining Coast Guard.

(xi) Separate CG website created for ease of processing online application forms.

The time line envisaged towards liquidation of shortages against sanctioned manpower is 2-3 years.”

Challenges and Constraints

3.13 The Director General, Indian Coast Guard highlighted the challenges faced by ICG which are as under: “…… I work for almost 14 Ministries. Secondly, of 146 platforms, on an average I deploy 50 ships at sea every day. इसका मतलब है क उसके िलए हमारा खच पूरा करने क जरत है और वह हर साल बढ़ता ही जा रहा है। वह हमारी जरत है। Secondly, maintaining of the ships and aircrafts is also equally important because that is for maintenance and refit. That means, 50 will be under maintenance out of 150. On an average, it would require minimum ₹ 3 crore. It translates to ₹ 150 crore for repair and maintenance. If I go for spares and maintenance, there is an escalation which grows. But the money which is required to be spent, it is being done in a phased manner. Fuel and expenses will take place close to the time as the bills are coming. I fully endorse what the Secretary, Defence Finance is making. But ours will go till the end of the day. My submission is, if it could be made available.”

3.14 The Defence Secretary, during the oral evidence, also highlighted the need to strengthen Coast Guard:

“सर, जब हम 5 िट िलयन डॉलर इकोनोमी की बात करते ह, उसम ू इकोनोमी का बत बड़ा रोल है। ू इकोनोमी का मतलब है िक समुी रसोसज को कैसे ादा से ादा एॉइट कर सक । इसम तेल है, िमनर ह, िफशरी है। यह काम हम अपने पूरे एरया म जाकर कर सक , इसके िलए कोगाड को सुढ़ करने की जरत है, लेिकन हम पूरे रसोसज को देखना पड़ता है। यह एक एपिडंग एरया है। अभी तक एक देश के प म हमने अपनी ू इकोनोमी को पूरी तरह से एायर नहीं िकया है। उसके िलए बत सारे यास िकए जा रहे ह, िडपाटमट ऑफ िफशरीज बनाया गया है, उनकी िसोरटी का िजा इन के पास है, इसिलए कोगाड को सुढ़ करने की आवकता है।“

Indian Coast Guard Academy

3.15 The Ministry, through a written submission, apprised the Committee of the latest developments regarding Indian Coast Guard Academy:

“ICG Academy is envisaged to cater for the professional training of personnel on subjects specific to Coast Guard’s non-military charter of duties. The proposed academy is planned to cater for the training of 650 trainees, including the training needs of personnel from other maritime stakeholders including Navy, BSF (water wing), Marine Police and friendly foreign countries

51 as part of International Cooperation. The Academy will have six schools as under:

(i) Search and Rescue School (ii) School of Maritime and CG Law (iii) Marine Environment School (iv) Boarding Operations School (v) Command and Staff School (vi) Technical and Management School

Approval-in-principle (AIP) for acquisition of 160 acres land at New Mangalore for setting up of ICG Academy has been accorded by Ministry of Defence on 26th November, 2019. Presently Board of Officers has been convened for acquisition of land.

Estimated Timeline

(i) Year 2020 (a) Acquisition/ Taking over/ survey of land. (b) Construction of boundary wall. (c) Land development. (d) Clearance from various Govt/Pvt agencies.

(ii) Year 2021 (a) Preparation of Zonal plan/ Building plan (b) Tender action. (c) Commencement of Construction.

(iii) Year 2022-2025

Construction and Commissioning of Academy.”

CHAPTER IV

MILITARY ENGINEER SERVICES

The Committee learnt that Military Engineer Services (MES) is one of the largest construction and maintenance agencies in India. It is responsible for creating the strategic and the operational infrastructure other than major roads, as also the administrative habitat for all three Services and the associated organizations of the Ministry of Defence. It provides engineering support to various formations for Army, Air Force, Navy, Coast Guard, Ordnance Factories and Defence Research and Development Organisation (DRDO).

4.2 The MES functions under the overall control of the Engineer-in-Chief (E-in-C) at the Army Headquarters, who is the adviser to the Ministry of Defence and the three Services Chiefs on all facets of works related issues. MES has also been supporting military diplomatic initiatives by creating infrastructure abroad for friendly foreign Governments/ countries. The MES organization, comprising of proficient personnel who are deployed across the length and breadth of the country at remote locations in all types of terrain and inhospitable climatic conditions, has been playing an important role in empowering the combat effectiveness of the Armed Forces.

Projections and Allocations to MES

4.3 The Committee noted that E-in-C’s Branch is responsible for monitoring of budget allotted for carry over Capital and certain Heads of Revenue and Maintenance Services for Army only. The allocations for the balance Code Heads of Army and all Code Heads of other Services is carried out to lower MES formations by Service Headquarters through staff channel.

4.4 The factors considered before projecting the funds are as under:-

(a) Number of ongoing works and their financial, physical progress and residual value. (b) The time required to complete the project.

(c) Works for which administrative approval has been issued and are likely to be tendered as well as their forecasted progress within the Financial Year. (d) Environmental constraints due to local climatic conditions and availability of local materials which may affect progress of work. (e) Works likely to be approved within the Financial Year based on Annual Major Works Programme (AMWP) listing and ceiling.

4.5 The allotments and expenditure incurred in the last five years including Financial Year 2019 -20, as apprised to the Committee during power point presentation of MES, is given below :-

CAPITAL AND REVENUE BUDGET (₹ in crore) FINANCIAL CAPITAL REVENUE YEAR

2015-16 5297.09 5256.36 9535.15 9257.10 2016-17 5734.88 5686.99 10514.37 10126.42 2017-18 6756.79 6552.79 9457.81 9089.65 2018-19 7142.63 7129.75 9384.58 9352.28 2019-20* 8316.67 6712.73 10104.96 7607.38 (80.71%) (75.28%) * As on 31st Jan 2020

4.6 The Committee have been apprised that MES has projected an amount of ₹ 23,938.91 crore for the Financial Year 2020-21.

Compromises made or likely to be made due to reduced budgetary allocations

4.7 When asked to state the areas where compromises have been made or likely to be made due to reduced budgetary allocations, if any, against the projections made by the MES, the Ministry through a written note replied as under:

“There was a problem in availability of funds especially in Carry Over Capital in both Army and Air Force in Financial Years 2017-18 and 2018-19. The same

has persisted in Carry Over Capital for Air Force in current Financial Year. To mitigate effects of the same, following actions were initiated:-

(a) AMWP ceilings for both Army and Air Force reduced to manage within available funds.

(b) Extension of probable dates of completion accorded for delayed projects.

(i) Reprioritized Works. Following sanctioned works were not tendered and reprioritized:-

(aa) Army. Six works worth ₹ 484.42 crore were reprioritized. In addition, 25 CCS works of 11th plan (Development of Infrastructure in Eastern Command) amounting to approximately ₹ 2397.14 crore were reprioritized for sanction due to shortage of funds.

(ab) Air Force. 57 works worth ₹ 2263.71 crore.

(ac) Navy. Nil.

(ii) Foreclosed/ Cancelled Works. Following sanctioned works were foreclosed/ cancelled (including under process for cancellation/ foreclosure) due to shortage of funds in last three financial years:-

(aa) Army - 25 works worth ₹ 1049.69 crore.

(ab) Air Force - 16 works worth ₹ 144.96 crore.

(ac) Navy - 11 works worth ₹ 56.03 crore.”

Work pending with MES

4.8 On being asked about work pending with MES and its effect on the working of MES as well as of the Services, the Ministry of Defence apprised the Committee as under:

“MES is responsible for planning and execution of works which have been listed in the Annual Major Works Programme (AMWP), duly approved by Ministry of Defence. In addition, there are certain special projects sanctioned by the CCS which are also in the charter of the MES. Once administrative approvals are given, the works are taken up for design and tender action before execution. Details of liabilities for last five years are as given below:-

Date as on Liabilities (Amount in crore) 01 Apr 15 18849 01 Apr 16 29010 01 Apr 17 33034 01 Apr 18 37534 01 Apr 19 29969

4.9 As regards the future plans of MES to carry out these works, the Ministry submitted as follows:

“As a thumb rule, the allocation of funds to MES in a Financial Year should be at least one-third of the liabilities at the beginning of the Financial Year to complete the works within the stipulated time frame. However, due to mismatch between the ceiling and allocation of funds, especially for Army and Air Force, the liabilities have steadily increased over successive years. In order to reduce these liabilities, following actions have been initiated:-

(a) Ceiling holiday was observed by Army for Financial Year 2018-19 wherein only ₹ 198 crore worth of new works were sanctioned. Similarly restriction of ceiling for Air Force to 50 percent in Financial Years 2018- 19 and 2019-20 was resorted to.

(b) Reprioritisation/ foreclosure/ cancellation of certain sanctioned works which are yet to be tendered.”

4.10 To a pointed question on the ability of MES to achieve its construction targets as per the established standard and schedule during the last five years, the Ministry of Defence intimated the Committee as under:

“By and large the MES has been able to achieve its construction targets for Capital Works, other than those where change in site or scope of work due to operational or administrative reasons takes place or on account of hindrances.

The comparison of targets versus achievement within the allocated funds can be gauged from the figures of actual final allocation versus final expenditure under Capital Head which ranges from 99 to 100 percent.”

4.11 In their Power Point Presentation before the Committee during examination of Demands for Grants 2020-21, the Ministry of Defence submitted the following initiatives being taken regarding MES:

 Cases recently approved by MoD

 Revision of maintenance norms, buildings and roads  Implementation of EPC methodology in MES  Performance security in MES contracts  Enhanced defect liability in MES contracts  Public Procurement (preference to MAKE IN INDIA)

 Cases under process with MoD

 Revision of Defence Works Procedure 2007  Revision of scales of accommodation for Defence Services 2009  Bulk MES establishment sanction  Revision of plinth area conversion factor  Electricity tariff for Armed Forces at par with civil domestic consumption

CHAPTER V

DIRECTORATE GENERAL DEFENCE ESTATES

The Committee have found that the Director General, Defence Estates is the advisor to the Ministry of Defence on administration of Cantonment Boards and Defence Land Management. The vision of the Defence Estates Organization is to develop Cantonments as model townships which would offer a wholesome environment and urban living to its residents, both uniformed personnel and civilians; to establish a system of land management that vigorously secures Defence land and ensures its optimum utilization and to maximize satisfaction of the public and stakeholders that come in contact with it.

5.2 Directorate General, Defence Estates (DGDE) is the Headquarters of the Indian Defence Estates Service (IDES) headed by Director General, Defence Estates at apex level. DGDE provides advisory inputs on all Cantonments and Land matters to the Ministry of Defence and Service Headquarters i.e. Army, Navy, Air Force and other organizations under the Ministry of Defence. Processing proposals for Acquisition of lands, Resettlement and Rehabilitation of displaced persons and for hiring and requisitioning of lands and buildings, besides management of defence lands, are some of the responsibilities of DGDE. As custodian of defence land records, DE Organisation is involved in updation and maintenance of records. It also ensures implementation of Cantonments Act 2006, Policies, Rules and Regulations and Executive instructions.

5.3 DGDE under its jurisdiction has 06 (six) Regional Directorates which are located in Lucknow (Central Command), Pune (Southern Command), Chandigarh (Western Command), Kolkata (Eastern Command), Jammu (Northern Command) and Jaipur (South Western Command). There are mainly 02 types of field offices under the jurisdiction of DGDE i.e. Cantonment Boards and Defence Estates Offices.

5.4 Cantonment Boards:- Cantonment Boards are local autonomous bodies. All 62 Cantonment Boards are under the administrative control of DGDE. Each Cantonment

58 has a system of local self-governance and has a Cantonment Board. Each Cantonment Board comprises of elected, nominated and ex-officio members. The Board is responsible for all civic, social, developmental and regulatory functions. The Cantonment Board has a Chief Executive Officer (CEO) who functions as Member- Secretary to the Cantonment Board. She/he is an officer of Indian Defence Estates Services.

5.5 Defence Estates Offices:- There are 38 Defence Estates Circles. Defence Estates Officers (DEO) head each of these Circles. DEOs are custodians of all Defence land records. They carry out hiring, requisitioning and acquisition of land and buildings for Defence purposes. DEOs also advise the users of Defence lands such as Army, Navy, Air Force, DRDO, and other Defence Establishments in land matters. DEOs also take care of all land title or acquisition/resumption related litigations. Leasing and licensing functions related to defence land are carried out through these field offices.

5.6 Assistant Defence Estates Offices:- There are 04 independent ADEOs. They carry out hiring, requisitioning and acquisition of land and buildings for Defence purposes and also advise the users of Defence land such as Army, Navy, Air Force, DRDO, and other Defence Establishments in land matters. They also take care of all land title or acquisition/resumption related litigations

Administration of Cantonments

5.7 Definition of Cantonment: Section 3 (1) of Cantonments Act, 2006 describes Cantonment as a place or places, declared by the Central Government by notification in an official Gazette, in which any part of the Forces is quartered or which, being in the vicinity of such place or places, is or are required for service of such Forces.

5.8 Background: Cantonments came to be established during British period for quartering of troops and civil population too was given lands on lease/grants within Cantonments and thus civil population came to reside in Cantonments. The first

Cantonment was established in Barrackpore (35 Kms. from Calcutta) in 1765 and the second at Danapore (Patna) in the same year.

5.9 Codification of laws regarding municipal administration of Cantonments in British India started with the enactment of the Cantonments Act in 1889, followed by the Act of 1910, and subsequently of the Act of 1924. Local self government in Cantonments was introduced with the enactment of the Cantonments Act, 1924 when the concept of having elected representatives of public was introduced for the first time.

5.10 After coming into force of the Constitution of India, administration of Cantonments became a Union subject. As per entry 3 of the Seventh Schedule to the Constitution of India, Parliament is the competent legislature to make laws for delimitation of Cantonment areas, local self-government in such areas, the constitution and powers of Cantonment authorities in such areas and the regulation of house accommodation including the control of rents in such areas.

5.11 74th amendments of the Constitution necessitated a de-novo look into administration of Cantonments and the role of Cantonment Boards under the Cantonments Act,1924. Accordingly, the Cantonments Act, 2006 was enacted to consolidate and amend the law relating to the administration of Cantonments with a view to impart greater democratization, improvement of their financial base, to make provisions for development activities and for other connected matters. The new Cantonments Act, 2006 came into force on 18.12.2006.

5.12 Presently there are 62 Cantonments in the country located in 19 States/UT and falling within the territorial stretch of 5 Army Commands as under:-

Central Command 25

Southern Command 19

Western Command 13

Northern Command 01

Eastern Command 04

A brief statistical overview of Cantonments is as under:-

 Population as per 2011 Census 20,91,734

5.13 The salient features of a Cantonment are as under:

o Land ownership of the Govt. Most of the land in the Cantonments is owned by the Government of India, Ministry of Defence. A part of this land has been given on grants and leases. In certain Cantonments, there is private land also, besides land owned by State Governments and other Central Government departments.

o Troops centric–health, hygiene, welfare and sanitation has predominance. The welfare, health and hygiene of forces residing within a cantonment is of primary concern. The military authorities exercise certain powers in this regard under the Cantonments Act, 2006.

o Modified democratic set-up requiring harmonious blending of the interests of the troops and civil population of the Cantonments. The Cantonments Act, 2006 addresses the concerns of civil population as well as the troops.

5.14 Constitution of Boards: A Cantonment Board is constituted for every Cantonment under section 3 of the Cantonments Act, 2006. It is a ‘body corporate’ functioning under the overall control of the Central Government in the Ministry of Defence. Parity is maintained between elected and official members in the Board.

Station Commander is the President of the Cantonment Board. Supervision and control over the working of Cantonment Boards are exercised through the General Officer Commanding-in-Chief/Principal Director Defence Estates of the Command at the intermediate level and by the Central Government through the Director General, Defence Estates (DGDE/Ministry of Defence) at the apex level. Principal Directors, Defence Estates report to the Director General, Defence Estates. At the Board level, the Chief Executive Officer performs the duties of Member -Secretary of the Board.

5.15 Cantonment Boards, under the provisions of sub-section (2) of section 10 of the Cantonments Act, 2006, are deemed municipalities under clause (e) of Article 243P of the Constitution, for the purposes of receiving grants and allocations; and implementing Central Government schemes relating to development of infrastructure and social welfare.

Projection and allocation of funds

5.16 The representative of DGDE furnished following information regarding Demands for Grants 2020-21 to the Committee: (₹ in lakh)

Head Actual BE RE RE BE BE 2018-19 2019-20 2019-20 2019-20 2020-21 2020- (Projected) (Projected) 21

Revenue 42606.50 47946.00 145906.79 50147.00 161117.93 38742 Head

Capital 283.23 1586.00 2997.46 994 2425.19 994 Head

Encroachment of Defence Lands

5.17 The Committee have been given to understand that about 70,922 acres of defence land is under the management of Defence Estates Organisation. The total constructed area under DGDE is 32.64 acre. Cantonment-wise details of defence land under the management of Defence Estates Organisation and details of Defence

62 land outside Cantonment under management of Defence Estates Organisation are given below:

Land under the management of DGDE (Outside Cantonment) Total Area (in Sl. No Name of DEO acres) 1 DEO Agra 701.43 2 DEO Ahmedabad 10.00 3 DEO Allahabad 3178.14 4 DEO Ambala 209.47 5 DEO Bangalore 85.68 6 DEO Bareilly 183.12 7 DEO Bathinda 154.10 8 DEO Bhopal 290.47 9 DEO Bhubaneshwar 1.80 10 DEO Bikaner 10.00 11 DEO Chandigarh 446.08 12 DEO Chennai 254.77 13 DEO Cochin 37.36 14 DEO Danapur 2221.99 15 DEO Delhi 429.65 16 DEO Jabalpur 944.55 17 DEO Jaipur 5.86 18 DEO Jallandhar 435.70 19 DEO Jammu 17.75 20 DEO Jodhpur 1.50 21 DEO Kashmir 36.81 22 DEO Kolkata 2049.82 23 DEO Lucknow 728.99 24 DEO Meerut 510.82 25 DEO Mumbai 1338.05 26 DEO Pathankot 184.65 27 DEO Pune 76.05 28 DEO Secunderabad 1466.31 29 DEO Siliguri 299.91 30 DEO Tezpur 2.31 31 DEO Udhampur 1.36

32 DEO Visakhapatnam 1176.79 17491.27

5.18 The Committee learnt with surprise that as on 31.12.2019, about 4458 acres of Defence Land under the management of DEO is under encroachment. The details of total area under the encroachment, DEO-wise and CEO-wise is as follows:

DEO-wise details of encroachment under the management of DEOs of Defence Estates Organisation [as on 31.12.2019]

Name of DEO Circle State Area (in acres)

2 3 4 ADEO Port Blair Andaman & Nicobar (UT) 0 Agra Uttar Pradesh 132.68 Ahmedabad Gujarat 2.95 Allahabad Uttar Pradesh 899.79 Ambala Haryana 317.50 Ambala Himachal Pradesh 19.74 Bangalore Karnataka 0.94 Bareilly Uttar Pradesh 6.84 Bareilly Uttarakhand 1.33 BBSR Odisha 0 Bhatinda Haryana 79.42 Bhatinda Punjab 6.05 Bhopal Madhya Pradesh 1085.71 Chandigarh Haryana 0 Chandigarh Punjab 20.071 Chandigarh UT Chandigarh 0 Chennai Tamil Nadu 34.26 Cochin Kerala 1.79 Danapur Bihar 409.88 Danapur Jharkhand 7.58 Delhi Delhi 27.68 Delhi Haryana 29.66 Goa Goa 0 Guwahati Meghalaya 0.40

Jabalpur Madhya Pradesh 204.67 Jabalpur Chhatisgarh 165.76 Jalandhar Himachal Pradesh 0 Jalandhar Punjab 69.43 Jammu J&K 12.77 Jodhpur Rajasthan 3.06 Jorhat Assam 0 Kolkata West Bengal 2.32 Kolkata Assam 0 Leh J&K 0 Lucknow Uttar Pradesh 105.28 Meerut Uttar Pradesh 28.42 Meerut Uttarakhand 18.13 Mhow Madhya Pradesh 49.71 Mumbai Maharashtra 142.98 Pathankot Himachal Pradesh 19.30 Pathankot Punjab 18.53 Pune Maharashtra 43.88 Secunderabad Maharashtra 133.65 Siliguri West Bengal 85.70 Siliguri Bihar 56.63 Srinagar J&K 19.64 Tezpur Arunachal Pradesh 0 Udhampur J&K 0 Visakhapatnam Andhra Pradesh 12.60 Total 4276.90

Cantonment-wise details of encroachment under the management of Cantonments of Defence Estates Organisation [as on 31.12.2019]

Name of Cantonment State Area (in acres)

1 2 3 Agra Uttar Pradesh 0.31 Ahmedabad Gujarat 0.24 Ahmednagar Maharashtra 0.93 Ajmer Rajasthan 1.58 Allahabad Uttar Pradesh 3.64 Almora Uttarakhand 0.03 Ambala Haryana 38.42 Amritsar Punjab 0 Aurangabad Maharashtra 5.15 Babina Uttar Pradesh 0.63 Badami Bagh J&K 0.31 Bakloh Himachal Pradesh 0 Bareilly Uttar Pradesh 15.92 Barrackpore West Bengal 0.24 Belgaum Karnataka 0.93 Cannanore Kerala 0.10 Chakrata Uttarakhand 0 Clement Uttarakhand 0 Dagshai Himachal Pradesh 0.10 Dalhousie Himachal Pradesh 0.05 Danapur Bihar 0.85 Dehradun Uttarakhand 0 Dehu Road Maharashtra 5.06 Delhi Delhi 5.25 Deolali Maharashtra 1.82 Faizabad Uttar Pradesh 0.21 Fatehgarh Uttar Pradesh 2.82 Ferozepur Punjab 15.19 Jabalpur Madhya Pradesh 3.93 Jalandhar Punjab 0.96 Jammu Himachal Pradesh 1.05

Jhalapahar West Bengal 0 Jhansi Uttar Pradesh 1.01 Jutogh Himachal Pradesh 0.03 Kamptee Maharashtra 0.91 Kanpur Uttar Pradesh 2.29 Kasauli Himachal Pradesh 0.45 Khasyol Himachal Pradesh 0 Kirkee Maharashtra 6.09 Landour Uttarakhand 0.05 Lansdowne Uttarakhand 0 Lebong West Bengal 0 Lucknow Uttar Pradesh 3.91 Mathura Uttar Pradesh 0.36 Meerut Uttar Pradesh 12.81 Mhow Madhya Pradesh 7.46 Morar Madhya Pradesh 0 Nainital Uttarakhand 0 Nasirabad Rajasthan 19.97 Pachmarhi Madhya Pradesh 1.84 Pune Maharashtra 0.25 Ramgarh Jharkhand 0.61 Ranikhet Uttarakhand 1.38 Roorkee Uttarakhand 0.01 Saugor Madhya Pradesh 5.54 Secunderabad Telangana 4.11 Shahrnpur Uttar Pradesh 0.13 shillong Meghalaya 0.14 St Thomas Mount Tamilnadu 3.93 Cum Pallavaram Subathu Himachal Pradesh 1.89 Varanasi Uttar Pradesh 0.21 Wellington Tamilnadu 0.04 Total 181.39

5.19 In a written reply furnished to the Committee, the Ministry delineated following steps to evict the encroachers:

“Ministry of Defence has already put in place a system whereby information of encroachments on defence land is received periodically and action taken thereon is monitored. The following institutional mechanisms are in place:- a) Each Service and Defence Establishment under whose management the defence land is placed, is responsible for prevention and removal of encroachments.

b) An annual certificate is obtained from the Station Commander or the Defence Estates Officer under whose management the land is placed, as the case may be, under the provisions of Rule 14 of ACR Rules, 1944 or Rule 13 of CLAR, 1937 which provides information on physical verification of land and unauthorized constructions or encroachments thereon. This enables the concerned defence authorities to take stock of illegal or unauthorized occupation and monitor action taken by field officers.

c) A quarterly report on prevention and removal of encroachments is obtained by HQ of each Service/Defence Establishment which is received by the Ministry of Defence and action taken is monitored.

d) The officers at the field level under each Service or Defence Establishment have been notified as “Estate Officer” under Rule-3 of the provisions of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 who are responsible for taking necessary action to deal with unauthorized occupation, unauthorized constructions and encroachments on Defence land placed within their jurisdiction.

e) Demarcation survey of entire defence land outside Cantonments and inside Cantonments have already been undertaken in order to enable the concerned authorities to reconcile the recorded land data with the physical occupation of land and also to ascertain if there are any encroachments on defence land. The survey report are submitted to the Dte. General Defence Estates.

f) Computerization of defence land records and digitization of important land files and documents have been done for efficient management of records and taking timely action against encroachments.

g) A Committee under the chairmanship of Addl. Secretary, Ministry of Defence periodically reviews action taken on removal of encroachments and also suggests ways and means to make the system more efficient from time to time.”

Expert Committee on Working of Cantonment Boards

5.20 The Committee have been apprised that attention of the Government has been drawn from time to time on various issues related to Cantonments which inter alia include renewal extension of expired/expiring leases, Building Bye Laws, transfer and mutation of Old Grant properties, freehold, service charges payable to Cantonments. To address these issues relating to the working of Cantonments, it had been decided to constitute an Expert Committee on working of Cantonment Boards under the Chairmanship of Shri Sumit Bose, IAS (Retd.) to make recommendations on the issues posed to it. The Terms of Reference of the Committee are as below:

(i) To study the existing Cantonment Act and to make specific recommendations for suitably amending the Act to impart modernization and democratization of the governance structure of Cantonment Boards. (ii) To make specific recommendations in connection with building bye-laws in Cantonments to align them with the best practices and create an incentive structure particularly with respect to energy efficiency, green building, water conservation/rain water harvesting, fire safety standards, disaster resilience, sanitation including zero liquid discharge, etc. and initiation of on-line clearances of building norms. (iii) To review the existing Floor Space Index (FSI) across Cantonments, and make recommendations on future rationalization. (iv) To make recommendations on the procedural modalities for transfer and mutation of property, including Old Grants Bungalows; freehold and leasing of property including its extension etc. (v) To make recommendations in respect of municipal services being provided to the residents of the Cantonment, incorporating e- Governance practices and also providing ‘Smart Solutions’ in respect of sewerage and drainage system, water supply, citizen safety, clean environment etc.

(vi) To make recommendations on levy of Service charges by Cantonment Boards from all entities. (vii) To make recommendations after review of orders relating to Cantonment administration, so as to weed out such orders that are out of date.

The Expert Committee has submitted its report to MoD on 13.02.2019.

Implementation of Central Government Schemes in Cantonment Boards

5.21 The Committee have learnt that the Centrally Sponsored Schemes such as Smart Cities Mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), etc. are to be implemented by the State Government/UTs in their respective areas of jurisdiction. Barring isolated cases, these Schemes are not being implemented by the State Government/District/State Municipal authorities, in the cantonment areas which are co-located with the city and form part of the common environment. The main reason for non-implementation is that the Cantonment Boards are perceived by the State Government as a separate entity from State Urban Local Bodies (ULBs), and that since the entire Cantonment area in a city is considered to be directly under the administrative jurisdiction of the Central Government and not under the State Government, therefore the Cantonment areas are left out by the State Government authorities at the time of assessment of projects by the State Mission Directorates, on the ground that the State Government is not liable to bear any expenditure in the implementation of Centrally Sponsored Schemes (CSSs) in Cantonment areas.

5.22 Further, the Committee have been given to understand that the MoD has taken up the matter with the Chief Secretaries of all concerned State Governments vide its letter dated 05.11.2019 to issue suitable instructions to institutionalize implementation of Centrally Sponsored Schemes in Cantonment areas. The Directorates are further pursuing the matter with the State Governments.

5.23 During deliberations of the Committee on examination of DFG 2020-21, the Committee raised the issue of proposal to convert civil areas of Cantonments into municipalities. In this regard, the Director General, Defence Estates deposed as under: “Regarding civil areas and municipalities, यह टाइम टू टाइम रे आती रहती ह, ेट गवनमट से भी कई बार आती ह, कई बार लोगों के िवसेस भी होते ह िक इसको ूिनिसपेिलटी म तील िकया जाए, पर इसम जो भी िडिसजन होगा, िमिलट ी इंटे्स, िसिवल ऐरेशन और ेट गवनमट्स, जो भी उसम कंडीशन होगी, अगर उस पर मानते ह तो उन सबको बेलस करके िलया जाएगा।“

Leased properties in Cantonment areas

5.24 The Committee found that Cantonments were set up primarily to quarter troops that necessitated provision of civic amenities such as houses, shops, schools, cinemas, clubs, banks etc. Certain land was, therefore, allotted on lease for such purposes under the provisions of Cantonment Codes of 1899 and 1912 and Cantonment Land Administration Rules (CLAR) of 1925 and 1937. Leases were granted for various tenures on payment of appropriate premium and annual rent. Some of these leases were granted in perpetuity and fixed tenures while others were renewable. Such sites are placed under the management of Cantonment Boards and Defence Estates Officers. There are total 6556 leased sites.

5.25 During examination of DFG 2020-21, the Committee enquired about commercial use of leased properties in Cantonment areas. The Director General, Defence Estates responded as under:

“जो ॉपट लीज पर है, उनका कमिशयल लीज पर हो करने की बात आपने कही। उसम अभी जो भी गवनमट की पॉिलसी है, िसिवल एरये म जहाँ कमिशयल यूज अलाउड है, उसम थोड़ी कंडीश दी गई ह। अगर पाटज उस कंडीशन के तहत आती है, then the renewal is being done. Similarly, for the bungalow area हम जो जनरली कहते ह, वहाँ के िलए भी पॉिलसी म यरली यह लेड-डाउन े ह।

……….वैसे तो ी हो के िलए यहाँ आने की जरत ही नहीं है। िबंग ा तो कोनमट बोड ही सन करता है। चाहे वह ी हो हो, इवन लीज ॉपटज हो। The Cantonment Board is the sanctioning authority. “

5.26 The Committee further enquired about feasibility of extension of lease period for residential purposes in Cantonment Areas. The Director General, Defence Estates submitted as under: “Where the lease policy has been expired, we are now going through the interim policy of March, 2017, which was extended up to December, 2019.

In the meantime, we are also working on a permanent lease policy now. So, I am sure increasing it by one year at a time is only an interim measure. Once the lease policy comes in, then these issues will be taken care of.”

5.27 She further added as under: “लीज के िलए क टोनमट ए म कोई तीली की जरत नहीं है। ोिं क the terms on which the leases were given have expired. Say for example, 90 year, जहाँ सीएलएआर म िदए गए थे, तो उसम नई पॉिलसी म, that will be covered.”

Commercial use of non-sensitive Defence Lands

5.28 The Committee desired to know whether the MoD was exploring the options of commercialisation of non-sensitive defence lands such as leasing lands to commercial establishments etc. to increase source of revenue. In this regard, the Ministry replied as under:

“With regard to the option of commercialization of non-sensitive defence lands, such as leasing lands to commercial establishment etc. to increase the source of revenue, it is intimated that very limited vacant Class – C defence land is available for this purpose with Cantonment Boards. Also funds for establishing such capital assets are also not available. Cantonment Boards could consider projects on B-4 vacant lands for projects which could generate revenue for Cantonment Boards such as community halls, office complex etc. This would also involve process of reclassification of B-4 lands to C for municipal purpose by the MoD. The proposal, if considered feasible, could be considered for sanction under Creation of Capital Assets. Cantonment boards have been advised accordingly.”

5.29 The Committee, during oral evidence of the representatives of the MoD, enquired whether the land available with Defence, Cantonment boards and Ordnance Factories may be made available to the State Governments for construction of helipads or parking space as it would lead to revenue generation for DGDE. A

72 representative of the Ministry of Defence apprised the Committee in this connection as under: “जहां तक पािक ग का आपने मुा उठाया, आपने िबु ल सही कहा िक नैनीताल वगैरह म पािक ग की बत समा है।इसम एक ाव हमने मंालय को सबिमट िकया आ है और यह मंालय के अधीन है। जहां रीािसफाइड लड हो जाएगा , वह पािक ग के िलए यूज हो जाएगा। जहां आपने क टोनमट बोड्स म लड की बात की, जो िसिवल एरया है, वह बत कंजेेड है और जो बाकी का एरया है, that is actually for the Forces. उनकी जरत देखकर जो भी बैलड तरीके से, जो भी इनको डीमोनेटाइ िकया जा सकता है, उसे मंालय जर कंसीडर करेगा।“

Other relevant issues 5.30 On being specifically asked about permission for repairs to the dwellers in Cantonment areas, the Director General, Defence Estates replied as under: “सर, जहाँ आपने रपेयर की बात की, इस पर बत पॉजीिटव े एमओडी ने िलए ह। दो महीने पहले एक पॉिलसी लैटर िनकाला गया है िक रपेयस, जो उस लैटर म िडफाइन िकए ह, they will be allowed without seeking any formal permission. उसम जैसे आपने बताया िक थोड़ा बत रपेयर, घर म वाइटवािशंग इवन रपलेिसंग द फ, ोिं क उसम लोगों को काफी िदत होती थीं और अाई करना पड़ता था। All these repair works have now been allowed without any formal permission to be given by the Cantonment Board. यह लैटर इु हो गया है और कोनमट म हर जगह पसाइज भी आ है।“

5.31 During deliberations on DFG 2020-21, the Committee raised the issue of construction of roads in Cantonment areas, especially in Telangana. The Defence Secretary responded as under:

“सर, जहां पर भी कोई ेिसिफक केस होगा तो हम ेिसिफक राई दगे। आडफोसज की रायरमट हाइए ायरटी है और िसोरटी कंिसड ेशन की भी रायरमट है। जहां पर आड फोसज और िसोरटी रायरमट की वजह से जमीन नहीं होती है, वहां पर हम लोग चचा करके , हमारी पॉिलसी है िक हम इल वैू लड िमल जाए। अगर लड होंग ऑगनाइजेशन नहीं है, तो इल वैू कॉ हम दे द। हम लोग उस पर दे रहे ह। जो भी केसेज ह, हम उनको बत तेजी से िनपटा रहे ह। कभी-कभी रा सरकार की ऐसी रायरमट होती है िक जहां पर फोसज या िसोरटी की वजह से जमीन नहीं दे पाते ह, तो िदत आती है।

इसको और ीमलाइन करने के िलए हम जीआईएस बेड िसम बना रहे ह, तािक बड़ी ीयरली यह हो जाए िक कौन –सी जमीन दी जा सकती है और कौन –सी जमीन नहीं

दी जा सकती है, तािक ेट को भी यह मालूम रहे िक यह जमीन फोसज की रायरमट के िलए है और उनको जरत पड़ेगी”

5.32 The Committee further raised the issue of limitations/restrictions faced by the civilians dwelling near Army depots. The Chief of Defence Staff replied in this context as under:

“जहां तक आपने िडफ स एैशमट के जमीन की बात की है, इसम नए आदेश िकए जा रहे ह िक िकस इलाके म, िकस हद तक आप िडफ स एैशमट के साथ आप रह सकते ह। जहां पर हमारी िलिवंग एकोमोडेशन है, उसम 50 गज तक िसिवल एैशमट को मकान बनाने की इजाजत दे रहे ह। हमारा 1000 मीटर का जो िनयम है, वह सीफीज से लगाया है, जो एोिसव एपट होते ह। अगर एुनिशंस िडपो म कोई हादसा हो जाता है, तो उसका नुकसान िकतनी दूरी तक होगा, यह सीफीज फैसला करते ह। उसके िहसाब से हम उतना दूर रहना पड़ता है। िसिविलयंस को कहना पड़ता है िक आप इस एैशमट के इतना नजदीक नहीं आएं। यह कोिशश की जा रही है िक ा हम एुनिशंस को विटकल साइलोज को जमीन के नीचे ोर कर सकते ह, तािक हजार मीटर के फासले को और कम िकया जा सके। हमारे देश के नागरक हमारी इत करते ह, हम भी उनकी इत करने की जरत है, तािक हम तालमेल के साथ उनके साथ रह सक ।...... हमारी कोिशश है िक उनको नजदीक से नजदीक आने िदया जाए और िकस तरीके से हम अपने िडपो को आधुिनक तरीके से बनाएं , तािक हमारी िडफ स की िया जारी रहे और िसिविलयंस को भी ादा तकलीफ नहीं हो।“

CHAPTER VI DEFENCE PUBLIC SECTOR UNDERTAKINGS (DPSUs) Introduction

The Committee understand that there are nine Central Public Sector Undertakings under the administrative control of the Department of Defence Production, Ministry of Defence.

(i) Hindustan Aeronautics Limited (HAL) (ii) Bharat Electronics Limited (BEL) (iii) Bharat Dynamics Limited (BDL) (iv) BEML (v) Mishra Dhatu Nigam Limited (MIDHANI) (vi) Mazagon Dock Shipbuilders Limited (MDL) (vii) Garden Reach Shipbuilders and Engineers Limited (GRSE) (viii) Goa Shipyard Limited (GSL) (ix) Hindustan Shipyard Limited (HSL)

Profit of DPSUs

6.2 The following are the figures of profit of the nine DPSUs for the last five years:

(₹ in crore) Name of 2014- 2015- 2016-17 2017- 2018-19 DPSU 15 16 18 HAL 2388 1998 2616 1987 2282 BEL 1167 1307 1548 1399 1927 BEML(PBT) 6.91 77.92 98.29 163.79 63 BDL (PBT) 614.19 847.31 802.81 773.82 423 MIDHANI 102.13 119.89 127.29 130.30 131 MDL 491.59 602.51 548.99 439.93 519 GRSE(PBT) 76.02 249.15 20.89 127.75 110 GSL 78.24 62.28 117.41 217.33 132 HSL* -202.84 19.00 53.77 20.99 36

* HSL after a long spell of losses has finally started making profit since FY 2015-16.

Cost and Time Slippages

6.3 When asked whether there have been any cost and time slippage by DPSUs during the last five years while supplying items to the forces, the Ministry of Defence replied as under:-

“(1) HAL: Currently, HAL is supplying Su-30 MKI fighter aircraft, Light Combat Aircraft (LCA – Tejas), Dornier Do-228, Advanced Light Helicopters (ALH), Chetak and Cheetal helicopters to the Defence Forces. As these supplies are against firm and fixed contracts, there are no slippages on account of cost.

HAL products are highly technology intensive and first of its kind development in the country, with dependence on multiple stakeholders, including foreign Original Equipment Manufacturers (OEMs) in most of the cases, which at times poses unforeseen challenges. The US sanctions during LCA Tejas development which in turn led to delay in certification of the aircraft, delay in receipt of Licence Technical Documents (LTD) from Licensor in case of Su-30MKI manufacturing etc, are few such instances. Due to such project/ production aspects, there are certain instances of rescheduling of deliveries in consultation with the customers. All such issues concerned with timely delivery of products have been addressed from time to time and actions such as augmentation of facilities, increase in outsourcing, duplication of jigs etc., are implemented as required.

(2) BEL: All contracts signed between BEL and Ministry of Defence are fixed price contracts and are based on negotiated prices firmed up prior to signing of contract. Any delay in completion of projects does not lead to cost escalation unlike Cost Plus contracts.

Meeting the delivery requirements of our customers, primarily the Indian Armed Forces is of paramount importance to BEL. With the usage of state-of- the-art Project Management tools, all efforts are made to ensure timely delivery to customers as per contract. As part of our continuous improvement of on- time delivery, the root cause for delay in delivery of some of the projects is analyzed and necessary corrective/preventive measures are taken to minimize/zero down the same. The On-time delivery during last 5 years is around 80percent. However, it is re-iterated that though BEL provides thrust on timely delivery, it is inevitable that some of the large complex projects get delayed due to Concurrent Engineering, accord of Bulk Production Clearance, Change in user requirement, Specifications to incorporate additional features, Site/platform Readiness etc. All these measures and improvement processes are expected to further enhance the on-time delivery.

(3) BEML: All contracts that the Company is executing are generally with firm prices. The company has been supplying equipment and spares to the Forces in time in the past. During 2012 to 2015 the deliveries of Heavy Duty Trucks has been delayed due to extraordinary situation, delay in Bulk Production Clearance for Sarvatra Bridge System and dispensation for executing 204 nos. ARVs. However, supply of Heavy Duty Trucks had commenced from October, 2015 and all pending orders in respect of Heavy Duty Trucks have been serviced. Bulk Production Clearance for Sarvatra Bridge system and supplies has been commenced. In the case of ARV, order amendment is expected shortly for execution.

(4) BDL: MoD orders in BDL are based on fixed price contract basis. Hence there is no impact of cost slippages. Milan 2-T has been delivered before delivery date as per Contract. However, due to reasons which are beyond control, products like Konkurs-M ATGM, Invar ATGM were delivered beyond scheduled time due to technical snag encountered during proof firings. Akash Weapon Systems were delivered beyond scheduled time due to delay in receipt of input materials from vendors and delay in receipt of Tatra Vehicles from M/s BEML due to embargo. Price are fixed no escalation, no cost incurred to Government. Additional cost is absorbed by BDL.

(5) GRSE: The delivered ships as per table given below are under fixed term contracts and there is no cost overrun in any case.

Major delivery made during the last five years:

(a) Water Jet Tarasa 31.12.2015 15.06.2017 Fast Attack Craft (b) 2nd Landing IN LCU-52 29.11.2014 20.07.2017 Indian Navy Craft Utility (c) ASW(Corve INS Kiltan 31.07.2014 14.10.2017 tte) (d) 3rd Landing IN LCU-53 28.02.2015 09.01.2018

Sl. Type of Customer Name of the Ship Contractual Actual No Ship Delivery Delivery FY 2018-19 (a) 4th Landing Indian Navy IN LCU-54 28.05.2015 06.04.2018 Craft Utility (b) 5th Landing IN LCU-55 28.08.2015 28.09.2018 Craft Utility (c) 1st Fast Indian Coast Priyadarshini 07.03.2018 27.03.2019 Patrol Guard Vessel (d) 6th Landing Indian Navy IN LCU-56 Nov 15 30.03.2019 Craft Utility Craft Utility FY 2016-17 (a) Water Jet Tarmugli 31.03.2015 16.04.2016 Fast Attack Craft (b) Water Jet Tihayu 30.09.2015 30.08.2016 Fast Attack Craft Indian Navy (c) 1st Landing IN LCU-51 29.08.2014 30.09.2016 Craft Utility (d) Water Jet Tillanchang 30.06.2015 21.12.2016 Fast Attack Craft FY 2015-16 (a) ASW(Corve Indian Navy INS Kadmatt, 31.07.2013 26.11.2015 tte) FY 2014-15

(a) ASW(Corve Indian Navy INS Kamorta 31.10.2012 12.07.2014 tte) (b) Offshore Govt. of MOPV Barracuda 04.09.2014 20.12.2014 Patrol Mauritius Vessel

The delays in warship construction are primarily on account of the following:

Finalization of fit and Freezing of Specifications by the customer: The warships being high value assets, the customers always try to ensure the latest weapons sensors are fitted. Many a times, development of the new systems and construction of ship progress concurrently. Since, the time frame for developmental activity is uncertain, the ship construction also gets delayed.

Failure of Major Equipment manufacturers: Several of the ship’s projects are affected when there is a delay in delivery of major equipment and systems by OEMs and failure of their engineers in resolving critical defects. Many of the OEMs are nominated by customers (Indian Navy and Indian Coast Guard).

Inability to Progress Integrated Construction: The build period of ships can be cut down when the ships are constructed by Integrated Construction (IC) methodology. The IC methodology can be adopted only when the equipment fit and specifications are finalized at the beginning (at Contract Signing) and design is frozen before commencement of production.

(6) GSL: There have been no time and cost slippages while supplying items to the Forces during the last five years.

During the last five years, GSL delivered six 105M Offshore Patrol Vessels (OPVs) to Indian Coast Guard, two Offshore Patrol Vessel (OPV) to Sri Lanka Navy, two Fast Patrol Vessel and 11 Fast Interceptor Boats for Government of Mauritius, one Damage Control Simulator for Myanmar Navy, one Damage Control Simulator, one Nuclear Biological Chemical Training Facility and Four 1000 T Fuel Barges for the Indian Navy, all as per contractual schedule.

(7) HSL: It is agreed that there has been time slippages in the past while execution of some projects due to various reasons like delay due to lack of working capital, numerous design changes, re-works, various modifications and delay in getting approval of drawings etc. However, it is pertinent to mention that HSL has completed all those legacy shipbuilding projects (13 Nos) pending since 2010 during the last five years on fast track basis. HSL has supplied three Inshore Patrol Vessels for Indian Coast Guard, 2 nos 25T BP Tugs and 3 Nos 10T Tugs for Indian Navy, 2 nos 50T BP Tugs to Denadayal Port Trust and 2 No Pontoons for Naval Dockyard (V) in last five years (01.04.2014 to 31.03.19). Further, HSL has also undertaken Medium Refit cum Modernisation of Russian made submarine, INS Sindhukirti and handed over to lndian Navy on 26 June, 2015. The ship repair division of the shipyard has achieved another milestone by completing the maiden refit of INS Astradharini, a torpedo launch and recovery vessel for Indian Navy, two weeks ahead of contractual refit schedule.

In the submarine division, Normal Refit of Indian Navy Submarine ‘INS Sindhuvir’, is progressing satisfactorily. The submarine was undocked on July 22, 2019 and presently undergoing trials. The submarine has completed maiden sea-sortie on 03 December, 2019, 2nd sea-sortie with full power trials on 21 December, 19 and 3rd sea-sortie with check dive and full power trials on 10-11 January, 2020. It is also planned to deliver the submarine by 31 January, 2020 to Indian Navy i.e. eight days ahead of contractual schedule.

Further, the ongoing shipbuilding projects such as Fleet support vessel, 2 Nos. Diving support vessels, 4 Nos 50T BP Tugs for Indian Navy are being executed as per strict contractual time lines. New concept of ‘Throughput assignment’ has been introduced in the production processes for construction of 2 Nos. Diving Support Vessels (DSV) and 50 T Tugs projects in order to meet the contractual timelines. Production activities like plate cutting, block

fabrication and erection /consolidation are being monitored through “Throughput Analysis”. Block fabrication is being done expeditiously for both these projects.

(8) MDL: In reference to Project P15B, there is no cost escalation from MDL side. However, there have been time slippage in deliveries. The details are given in the table below.

List of delayed Buyer Furnished Equipment (BFEs) and Buyer Nominated Equipment (BNEs)-

S. System / Required Present Delay Reasons for Delay / Remarks No Item date in Status in . MDL as (EDC) month per s w.r.t. contract (B) contra (A) ctual sched ule (B-A) 1 LR SAM Sep-16 Mar-20 43 Delay in decision on re-categorisation of (BNE) item. Item initially converted to Buyer Furnished Equipment from Variable Cost item and subsequently converted from Buyer Furnished Equipment to Variable cost item by 2 MF STAR Sep-16 Mar-20 43 Indian Navy. Delay in receipt of Statement of (BNE) Technical Requirement. Price Negotiation Committee conclusion delayed due to issue of one time NRE cost issue. 3 EW Shakti Apr-16 Sep-20 54 (BNE) Developmental item. Lab demo yet to be completed. Post this User Evaluation Trials (UET) will be carried out. Delivery of main equipment likely by Sep 2020.

4 SS Radar Apr-16 Feb-20 47 (BUYER Item converted to Buyer Furnished FURNISHE Equipment. Ordered by Navy in Feb 17. Item D likely to be received by Feb 2020. EQUIPMEN T) 5 Radar Rawl Apr-15 Feb-20 59 Item converted to BUYER FURNISHED 02 (Y 704) EQUIPMENT. Subsequently Radar Rawl 02 (BNE) (Ex Viraat) nominated for Yard 704. Refurbishment order placed on M/s BEL by Naval Dock (Mb) in Dec 17. EDD: Feb 2020 6 AEW Radar Apr-17 Jul 21 52 Order placed by Indian Navy in Mar 19. (Y 705 - Binding drawings yet to be received. EDC for 707 drawings - Dec 19 ) (BUYER FURNISHE

S. System / Required Present Delay Reasons for Delay / Remarks No Item date in Status in . MDL as (EDC) month per s w.r.t. contract (B) contra (A) ctual sched ule (B-A) D EQUIPMEN T)

7 SRGM Feb-16 Jun-19 41 (Y 704) (Received SRGM Gun finalized for Y 704 in May 16. (BUYER \) Ordered by MDL under additional Base & FURNISHE Depot (B&D) Spares of P15A as directed by D Navy. EQUIPME NT) 8 MR Gun Mar 14 Not 68 MR Gun (M/s BAE make) finalized by IN for (Y 705) (Binding known Y 705 to 707. (BUYER Data) Binding drawings yet to be received. FURNISHE Jan 18 22 D (Equipme Not EQUIPMEN nt Known T) required as per contract)

9 Integrated Apr-16 Not 43 ASW Known Defence Suite, IADS (Activated Towed Array Sonar, Requisite space for the equipment being ATAS + earmarked on the ship. Ship will be delivered Active without Integrated ASW Defence Suite Torpedo (IADS). Decoy System, ATDS) (BUYER FURNISHE D EQUIPME NT)

Reasons for the delay: Some of the designs/specifications of engineering equipment, weapon systems and sensors are not frozen in the beginning

81 considering rapidly evolving technology and changing strategic requirements. Due to these aspects the design of ship and its internal structure keeps on changing intermittently till the trials. Hence, when the specifications of systems/equipment get delayed, it obviously impacts the project timelines. It is to be noted that some of these systems/equipment are of developmental nature which are being conceptualized, designed, tried and tested in collaboration with organizations like DRDO and other companies. The final specifications of such systems/equipment are available for manufacturing only after prototype testing. Hence, the project activity gets impacted for want of the finally manufactured systems/equipment. Due to involvement of various stakeholders in shipbuilding industry, the timelines of construction are impacted. Also, the non-availability of Buyer Furnished Equipment (BFEs) and Buyer Nominated Equipment (BNEs) affects the timelines.

In reference to Project P75, there has been requirement of revision of delivery dates and enhancement of cost in Project-75 due to scope creep occurring due to reasons not attributable to MDL: a) Delay in delivery of material: Material non-availability / late supply of material from OEMs/Suppliers has resulted in un-avoidable revision of delivery dates. b) Incomplete TDP: Non-availability of complete and correct TDPIS (Technical Data Package Information System) from collaborator had been a major hurdle in progressing with construction, Setting to Work (STW) and Trials in accordance with schedule. c) Non availability of OEM specialist: Non-availability of concerned specialists as required from the collaborator / OEMs such as Navantia, MAN, Jeumont to attend defects encountered, which were not attributable to MDL, has adversely impacted sea trial schedule and timelines for delivery of the submarines. d) Delay in defect rectification and software issues: Large no. of defects had been observed during the STW, Harbour Acceptance Trials (HATs) and Sea Acceptance Trials (SATs) phase and substantial time has been lost in identification and resolving defects by the OEM Specialists. Further non-availability of updated software viz. software of Integrated Platform Management System (IPMS) and Programmable Logic Controller (PLC), has severely impacted both progress of construction and trials.

(9) MIDHANI: MIDHANI is not supplying directly to Forces.”

Complaints regarding product quality, delay and malpractices

6.4 The Committee desired to know whether any complaints w.r.t. product quality, delay and malpractices have been received by DPSUs during the last 3 years. They also enquired about the remedial measures so taken. In response, the Ministry submitted as under:-

“(1) HAL: HAL is regularly supplying aircraft, aero-engines and accessories to Defence Forces. Any failure during the course of utilization is reported to HAL in the form of request for Defect Investigation on the specific accessory/aero-engine. Each of these defect investigation is carried out by a team comprising members from customer, DGAQA, CEMILAC and HAL. OEMs are also involved in the investigations. Based on these investigations, remedial measures are implemented. Implementation of these measures is monitored through joint team of HAL, Customers, DGAQA and CEMILAC on need basis. (2) BEL: Most of the complaints received by BEL are of minor in nature and are related to Supplies, Quality, Service and Spares. The average on-time resolution is around 92percent with an average cycle-time of 29 days.

BEL has set stringent quality norms to eliminate equipment faults during the manufacturing phase itself. The product is tested at different stages as per the approved Test Specification provided by the customer. The products / systems manufactured are subjected to various quality assurance tests like bump and vibration, rain test, salt spray test, mould growth, EMI / EMC etc. The products / systems are tested in presence of the resident customers who are positioned in the company by the quality wings of the Armed Forces before dispatch of product / systems. This process ensures supply of reliable / quality products. The complaints related to post-delivery, if any, are being handled on top priority through structured product support mechanism. In view of the above, there are no significant complaints received with reference to product quality, delay and malpractices in the last three years.

(3) BEML: BEML does not have any significant complaints with regard to product quality, delay and malpractices during the last 3 years.

(4) BDL: No major complaints have been received with reference to Product Quality for the last three years. The Project wise details are as follows: Data on Customer Complaints for the last three Years:

Sl Product/ No of complaints Bal as No Division 2016-17 2017-18 2018-19 on Recd Clrd. Recd. Clrd. Recd. Clrd. 31.3.1 . 9 1 Konkurs-M 3 3 0 0 0 0 0 2 Invar 0 0 0 0 0 0 0 3 Launcher 0 0 0 0 0 0 0 4 Akash 11 11 4 3 14 11 3 (SAM) 5 Akash 6 4 4 4 0 0 0 Ground System 5 Prithvi 4 3 5 3 4 3 1 6 Naval (TAL 7 0 7 2 5 0 5 Torpedo) 7 Electronics 3 3 1 1 0 0 0 Division 8 MILAN -2T 0 0 1 1 1 0 1 TOTAL 34 24 22 14 24 14 10

BDL is making all out efforts to support its Users by promptly addressing the User’s complaints of the product supplied as and when required. To avoid recurrence of complaint, BDL is arranging frequent visit to depots for Maintenance and repair, rework of faulty lots/ equipments, checking Product storage conditions, joint review Inspections, training, remedial measures etc.

(5) GRSE: There were no complaints received for delivered products w.r.t. quality, however, delays in deliveries of the platforms have been an area of concern for the customers as well as shipyard. The major reasons for delay and suggested approach have been highlighted above. Modular integrated construction facility at the shipyard along with other improvement initiatives under implementation at the shipyard is expected to mitigate the delay in future.

(6) GSL: No complaint with reference to product quality, delay and malpractices has been received by GSL during the last three years.

(7) HSL: No major complaints have been received for the last three years.

(8) MDL: MDL has not received any complaint from the clients during the last three years.

(9) MIDHANI: Quality related complaints have been received from different customers for last three years. Summarized data for last three years is as below:

Sl. Parameters 2016-17 2017-18 2018-19 No. 01 No of Complaints Received 16 13 27 from customer

02 Percentage of complaints 100% 100% 100% resolved as against customer complaints

Remedial measures have been taken care by MIDHANI by replacing the materials.”

6.5 The Committee, during oral evidence of the representatives of the MoD, were apprised that the DPSUs have first four contracts from Myanmar, and in two of them supplies have been made before time. Till now, no complaints have been received from them. They were further apprised that the DPSU products are being exported to certain countries depending on the clearance.

Modernisation of DPSUs

6.6 On the present status of modernization of DPSUs, the Ministry of Defence submitted following information:-

“(1) HAL: Considering that aerospace is a highly technology intensive domain and is also characterized by rapidly changing technologies, obsolescence issues etc. and to cater to increasing customer demands for existing products, need for modernisation/upgradation is reviewed on a regular basis at HAL. The modernization plans are finalized considering the available capacity and augmentation required in new projects being undertaken. The modernization plan includes upgradation of technology through establishment of new processes, state-of-the-art manufacturing and design facilities, improvement in layouts, storage, material handling and IT infrastructure. Currently, creation of additional capacity is under process for manufacturing of LCA, Repair and Overhaul (ROH) of SU-30MkI, ROH of AL-31FP engine and new programmes like LCH, LUH and HTT-40 etc, which are expected to enter production phase in the coming years. The futuristic indigenous design and development programs like 10-12 ton class helicopter, higher thrust class aero- engine etc once sanctioned will enable further modernization and upgradation

85 of the existing state-of-the-art facilities of the company and add to the indigenous product capability portflio.

A state-of-the-art greenfield helicopter manufacturing facility is being set up at Tumakuru, about 100 km from Bengaluru. Hon’ble Prime Minister, Shri Narendra Modi laid the foundation stone for this Helicopter Manufacturing Facility on 3rd January 2016. HAL has successfully flown LUH from the Tumakuru facility on 29th December 2018 and also met the timeline of 2018 given by the Hon'ble Prime Minister during foundation stone laying ceremony.

During the last five years expenditure to the tune of ₹ 6500 crore have been made by the company towards fulfilling the modernization, capacity augmentation, facility up gradation and other capital / infrastructure requirements. During the current year proposed allocation to the tune of ₹ 1400 crore have been planned towards the same which include replacements of Plant and Machinery, test instruments for manufacturing, ROH etc.

(2) BEL: Company has been continuously modernizing its infrastructure to be in tune with the changing needs of the technology / products. Specific groups in all the units scan the technology changes that are taking place and identify new processes in the world market for acquisition. This enables BEL to maintain its infrastructure on par with international standards. BEL’s investment towards modernization and acquiring new plant and machinery (including Test instruments, R&D investments, infrastructure up-gradation etc.) was ₹ 634 crore in 2017-18 and ₹ 674 crore in 2018-19.

BEL’s annual modernization expenditure is fully met through internal accruals. Some of the major facilities established during the year include Shock Test Facility, High Temperature Test facility, Surface Mount Technology (SMT) Assembly Line etc. The CAPEX planned for 2019-20 is around ₹ 650 crore.

(3) BEML: BEML is steadily upgrading its manufacturing facilities, IT infrastructure and R&D facilities and capex spent is about ₹ 50 crore to ₹ 70 crore per year. BEML is going for outsourcing wherever capability / capacity is available in the industry and generally restricts capital expenditure only to add machines for carrying out very critical operations. The Company’s capex is funded through internal accruals and borrowed funds.There is no budgetary allocation for this purpose from the Government. For the current year, the following capex projects have been taken-up:  Upgradation and augmentation of the manufacturing facilities  Upgradation of engine test cells to meet BSIV emission norms  Localization of cabin for Heavy Duty Trucks  Localization of Defence spares through UP / Tamil Nadu Industrial Corridors

 Infrastructure at SEZ Aerospace Park, Bengaluru for Civil aviation / Offset opportunities and at Bangalore Complex for National programmes in satellite and space technology.  Upgrading IT infrastructure for cyber security requirements  Innovation and Industrial design center.

BEML has also submitted proposal to NITI Aayog seeking budget allocation for the following projects:  Centre of Excellence for Metro cars development  Design and Development of 20 Cm. Rope Shovel for Mining application.  Design and Development of 240 Ton Dumper for Mining application  Centre of excellence for recovery vehicles

(4) BDL: BDL has spent considerable amount on modernization in the last 5 years which include procurement of machinery and development of infrastructure facilities to enhance productivity of major products. Modernisation and replacement of Plants and Ramping up of capacities for SAMs and ATGMs. Modernisation programmes are financed by the company from internal resources. ₹ 70 crore has been earmarked on CAPEX towards modernization of Plant and Machinery and other infrastructure developments for 2019-20.

 In line with its expansion programme a. The 2nd production line for MRSAM is in progress. b. Bhanur Unit production facility for manufacture of MP ATGM is in progress. Process of establishing new units at Amaravati, Maharashtra is in progress. There is no budgetary support by Government. (5) GRSE: a. Phase-I Modernization was completed in 2005 with a total financial outlay of ₹ 76.05 crore.

b. Phase- II Modernization was completed in 2013 with a view of augmenting shipbuilding infrastructure.The facility consists of the following:

1. Dry Dock (180M x 29M) of 10000 Tons capacity 2. Inclined Berth (180M x 23M) of 4500 Tons capacity 3. Module Hall (99x30 M) with telescopic sliding roof arrangement

4. Goliath Crane of 250 Tons capacity, covering above Dry Dock, Inclined Berth and ModuleHall, for handling of Mega Hull Blocks up to 250 tons. 5. Paint Cell for blasting and painting of hull blocks at controlled conditions of temperature and humidity. 6. Portable Shelters for Dry Dock and Inclined Berth, to provide all weather ship construction facility. 7. Electrical Sub-Station of 6 KV capacity to meet enhanced power supply requirements. 8. Enterprise Resource Planning (ERP) Phase-2 implementation consisting of Data center at MW, SAP, Mail-Messaging and DMS.

The total financial outlay was ₹ 529.8 crore for Phase-II and also expenditure incurred for ERP Phase-II was ₹ 22 crore (approximately).

Expenditure incurred in Phase-I and II: The total financial outlay was ₹ 605.85 crore (₹ 76.05 crore for Phase-I and ₹ 529.8 crore for Phase-II). ₹ 274.12 crore expenditure from internal accruals of GRSE and ₹ 331.73 crore expenditure funded by Navy.

c. The shipyard is progressing with its ambitious plans of revitalization and refurbishment of Rajabagan Dockyard Unit (RBD) which is planned to be completed by end 2021. After revitalization and augmentation of facilities at RBD, the shipbuilding capacity of GRSE will increase from 20 ships to 24 ships concurrently.Generally the modernization/ upgradation activities at GRSE are carried out against Board Approved Capital Expenditure Budget of Financial Years for continual upgradation of facilities of the company. These are need based modernization for continual upgradation of facilities of the company. The Capital Expenditure for FY 2017-18 is ₹ 55.73 crore and for FY 2018-19 is ₹ 46.80 crore. Further, Capital Expenditure budget for FY 2019-20 is ₹ 55 crore and for FY 2020-21 is ₹ 100 crore.

(6) GSL: GSL is implementing infrastructure augmentation for MCMV plan in a phased manner to enhance capability of shipyard to build vessels for the Indian Navy, Indian Coast Guard and exports. The plan includes creation of dedicated facilities for construction of high technology Glass Reinforced Plastic (GRP) hull Mine Counter Measure Vessels (MCMVs), new steel and aluminium fabrication facilities for construction of new ships and facility for repair and refits of ships. Yard ‘Infrastructure Augmentation Plan for MCMV’ is being executed in five phases of which Phases 1 and 2 were completed in March 2011. Construction

88 work for Phase 3A was completed and inaugurated by Hon'ble Prime Minister in November 2016.

The work on Phases 3B and 4 are in progress. Phase 3B comprises of setting up of facilities like Steel Preparation Shop (SPS), Block Assembly Workshop (BAW), Amenity Building, Ship Stores, Blast and Paint cells and ancillary buildings. SPS has been completed and shifting of equipment from existing SPS to new SPS is in progress. Erection of BAW is in progress. The expected date of completion of Phase 3B is April 2021.

As part of Phase 4, dedicated facilities for MCMV Glassfiber Reinforced Plastic (GRP) construction was completed in October 2019. Construction of MCMV Command, Control and Design Office Building, that will house all major functional departments for execution of the MCMV project, is in progress as part of Phase 4 and civil works is likely to be completed by March 2020. Modernization plan for MCMV construction facilities is being executed using funds partly from internal accruals and partly from Government funding. The Government has sanctioned ₹ 400 crore in October 2010 towards development of facilities for building MCMV which is utilized for execution of Phase 1, 2 and 3A along with internal accruals from GSL to the tune of about ₹ 321 crore.

Further, MoD has sanctioned ₹ 480 crore, as approved by Defence Acquisition Council (DAC) for augmentation of infrastructure under Phase 3B and 4 for MCMV Project in March 2011, the work on which is in progress. An amount of ₹ 258.95 crore received from the Government towards this has been fully utilized. GSL has submitted request to MoD for allocation of funds for disbursement of balance fund of ₹ 221.05 crore, which is awaited.

(7) HSL: There is no budgetary allocation for modernization. However, in the year 2010, details of essential requirements for replacement/ refurbishment/ renewal of age-old plant, machinery and infrastructure had been worked out to an extent of ₹ 457.36 Cr and the same has been projected to MoD vide HSL letter CMD/HSL/025/2010 dated 26 Nov 2010. Accordingly, GoI vide letter 1(10)/2010/HSL/DPO(NSM))/PLG-VIII/10 dated 23 Dec 2011 had sanctioned ₹ 457.36 crore for Refurbishment and Replacement of Machinery and Infrastructure (RRMI). The RRMI activities are being carried out expeditiously.

Enterprise Resouce Planning (ERP) Implementation. As part of infrastructure up-gradation, implementation of SAP S4/HANA ERP solution is in progress. The unique feature of this ERP system would be integration of Design software, Aveva Marine including its 3D features with an embedded Product Lifecycle Management (PLM) in SAP. This would be first time in any Indian Shipyard that Design software would be integrated with any ERP software

89 through PLM. ‘GO LIVE’ of the SAP S4/HANA ERP system commenced on 10 May 2019.

Solar Power System. HSL has undertaken clean and green energy initiatives by inaugurating a 02 MW rooftop solar power system on September 21, 2018. Further, an additional 01 MW capacity rooftop solar power system has been installed during the year 2019. This is the largest rooftop solar plant in Andhra Pradesh installed at a single location and will help HSL to save about ₹ 1.5 crore in its energy costs, while reducing its environmental footprint.

The entire project including design, supply, erection, testing, commissioning including warranty, operation and maintenance is being undertaken by M/s Clean Max without any operation and capital expenditure from the yard side and was executed under the Solar Energy Corporation of India (SECI) Rooftop Solar Scheme.

(8) MDL: Details of modernisation projects which are in progress at present are as under:

Submarine Launch Facility: A submarine launch facility is being created to facilitate load out/launch of fully constructed Submarine in the Submarine Assembly Workshop at Alcock Yard. On completion of the project, the launching of Submarines can be done independent of dry dock. The project comprises of

(a) Hard Stand of the area in front of the Workshop up to the Quay Wall

(b) Fabrication of Lifting Beams

The overall cost of the project will be approximately ₹320 crore. The Submarines constructed will be transported out of the Workshop with the help of Lifting Beams and Self-Propelled Modular Transporters (SPMTs) and loaded on to the Floating Dry Dock (FDD). The Submarine loaded on to the FDD will then be taken to deep waters in the harbor and made afloat. Expected date of completion is December 2020, Physical Progress as on 23.01.2020 is 20 percent.

Security Complex (In progress): An all new Security Complex is being constructed at the main entrance of MDL. This is a state of art building which includes following:

1. Civil work G+2 Structure

2. Security equipment, gadgets, access control etc.

Total cost of the project will be approximately ₹ 36 crore. This complex will accommodate key MDL departments such as Security, CISF, PRO, Safety, Fire, Estate, Health, Safety and Environment (HSE) and Control Room.

EDC: October 2021, Physical Progress as on 23.01.2020: 13 percent

From 2020-2030, the spending on modernization is under consideration amounting to ₹ 5500 crore approximately. The Modernization consists of mainly creation of integrated Deep Water Shipbuilding and Repair Facility at MDL yards, creation of support facilities at Gavhan, modernization of facilities at MDL consisting of replacement of Cranes, extension of slipways and renewal of existing infrastructure.

(9) MIDHANI: About ₹ 800 crore Capital expenditure has been planned for next three years towards modernization. Details of the modernization plan of major items is as mentioned below

(All values in ₹ crore)

Sl Name of Estimated Impact of Modernization Status No the project Cost 01 Wide plate 471.64 Exclusive in-house facility for Order placed for equipments and Mill wide plates of various alloy facility under erection type to improve the yield of the material. 02 New VIM 38.37 Increase the Melting capacity Order placed. Expected to be 8T & to accommodate future completed October 2020 related demand of Special steel and Facilities super alloys. 03 Casting 32.47 To increasing capacity for Skull Melting furnace order Facilities indigenous production. placed. (Major item) 04 Melt shop 14.44 To reduce production down Order placed of major Modernizat time. equipments ion & Pumps 05 Forge shop 34.77 To reduce down time, Energy Order placed of major Modernizat consumptions equipments and expected ion completion July 2021 06 Armor 28.98 State of art armour Order placed and Supply of Project manufacturing facility is being Major equipment to be setup at IMT Rohtak completed October 2020 Products – Bullet Proof Jackets, Vest, Shield, Morcha& Bullet Proofing of Vehicles 07 Spring 28.45 To enter new markets – Order placed and erection under Project railways etc. progress, expected to be completed June 2020

08 Metal 34.00 To capture India market for Under Tendering

Powder consultancy Project 09 Iso thermal 10.97 To enhance value added Order Placed and commission Forging product like disc for adour under progress expected facility engine which will help to completion June 2020 reduce import

10 New 48.00 To capture export market Major furnace procurement is Titanium demand. under tendering and balance Shop facilities procurement will be done in 2020-21 11 BWD Mill 42.94 Enhance the capacity Finalization of offer April 2020

12 End Fitting 13.29 To accommodate Future Under Tendering facility demand

The above facility will enable MIDHANI to enhance the capacity, cost competitive, increase export market share and meeting the customer requirements with latest technology and equipments.” 6.7 As regards the impact of modernization on the production capacity, export and import substitution of products, the Ministry submitted as under:-

“(1) HAL: The planned increase in capacity is primarily in the area of helicopters manufacturing (LCH and LUH) and aircraft manufacturing (LCA) to meet the requirement schedule of Defence forces. Increase in capacity would also cater to the requirements of export for helicopters. The greenfield facility planned for helicopters would cater to the manufacture of indigenously developed LUH program which will replace the ageing fleet of Cheetah/ Chetak helicopter produced under ToT. Manufacture of state-of-the-art products like LCA, ALH, LCH, LUH, HTT-40 etc within the country helps avoid direct import to the extent of production by HAL thus furthering the import substitution efforts. All these platforms have export potential.

(2) BEL: The new infrastructure/technology which are inducted have a bearing on the production capacity. The increase in Value of Production, turnover year-on-year clearly justifies the objective of modernization. Modernization and up-gradation of infrastructure setup in the recent past has enabled the company to indigenously manufacture critical equipment/systems there by, minimizing the dependency on foreign OEMs. Some of the major systems like Integrated Air Command and Control System (IACCS), Weapon Locating Radar (WLR), Cdr TI Sights, Tropo Upgrade, Integrated Communication System (ICS), Ground Based Mobile Elint System, Low Intensity Conflict Electronic Warfare System (LIC EWS), Electronic Voting Machines (EVM), Voter Verifiable Paper Audit Trail (VVPAT) etc., are indigenously designed

and manufactured. Around 87percent of turnover on an average generated from indigenous technology by making use of in-house infrastructure/facilities, skilled manpower etc., reflects company’s endeavor towards self-reliance.

(3) BEML: Modernization of facilities helps in increased productivity, cost reduction and quality of products. Continuous upgradation of products and design and development of new products in line with International models enables competing with Global players and exports of products and import substitution.

(4) BDL: Production Capacity:Capacity augmentation has been taken up for all Major projects of BDL for meeting the demands of the Armed forces. BDL has also achieved the capacity enhancement of Konkurs-M (ATGM). Capacity of the production lines of Akash Missiles has also been ramped-up. Due to Modernization of the plant and Machinery, the cumulative production capacity of ATGMs has been enhanced by more than 80 percent. Import substitution of products: BDL is putting up determined efforts towards indigenization of ATGMs with the objective of self-reliance, reduction of Foreign Exchange out flow and achieving cost reduction. Indigenization of products like Konkurs-M, Invar, Milan-2T has been achieved upto 97 percent, 78.6 percent and 71 percent respectively. Export of products: Apart from regular supplies to Indian Armed Forces, BDL is also exporting Torpedoes to friendly neighboring countries. Ministry is encouraging exports in a big way by issuing SOP on exports, ease of license to export. BDL has bagged 4 export orders. Out of received orders, BDL has executed one order and balance three orders will be executed in 2020-21. Capacity enhancement by modernization will be helpful for further export. For achieving exports, BDL has regular interaction with the overseas customers. Offset implementation also offers a major opportunity to achieve export targets. BDL is interacting with aero-space majors in Europe and Russia to exploit opportunities arising out of offsets. (5) GRSE: Post modernisation of infrastructure in 2013, GRSE can undertake construction of 20 Nos. of ships (08 Large ships and 12 small ships) concurrently. Details regarding construction of 08 Nos. Large Ships:- Construction of 04 Nos. Large Ships up to launching stage is being constructed in 02 Nos. Dry Docks and 02 Nos. Inclined Berths located at Main Unit of the company. Construction of 04 Nos. Large Ships for post launch Fitting- out and Trials up to delivery stage is carried out at 02 Nos. Jetties located at Fitting Out Jetty (FOJ) Unit of the company.

Details regarding construction of 12 Nos. Small Ships:- Construction of 02 nosand 03 nos Small Ships up to launching stage can be carried out in No. 01 and No. 2 Dry Dock of RBD Unit of the company respectively. Construction of 03 Nos. Small Ships for post launch Fitting-out and Trials up to delivery stage is taken up at 02 Nos. Floating Jetties (Ganga Jetty and Hooghly Jetty) located at Raja Bagan Dockyard (RBD) Unit of the company. In addition, Wet Basin and Western Jetty situated at Main Works Unit can accommodate 02 nos small ships in each facility, in total 04 nos small ships, for post launch outfitting work. This enhanced capability of the shipyard will not only bolster the indigenous shipbuilding capability of the nation but will also open up opportunities for grabbing more export orders. To continually utilize this augmented production capacity extensive efforts are being undertaken by GRSE by responding to RFIs/ RFPs of around 30 ships of Indian Navy/ Indian Coast Guard/ Indian Army for indigenous orders as well as through aggressive marketing initiatives with friendly foreign countries for exporting warships. (6) GSL: On completion of ongoing infrastructure augmentation Plan for MCMV, GSL will have the capability to build high technology GRP hull MCMVs indigenously with help of foreign technology provider. GSL will be the only Indian yard to have facility for series construction of MCMVs with GRP technology. In addition, this will also enhance the shipbuilding capacity of the Yard for steel ship construction. With the on-going modernization plan, the capacity of the shipyard will be enhanced by approximately three times of its present capacity.

(7) HSL: The Refurbishment and Replacement of Machinery and Infrastructure (RRMI) activities are being taken up for replacement of old machinery and infrastructure. Augmentation of production capacity will be carried out for the future projects like Fleet Support Ships (FSS). Budget allocation will be worked out with the help of collaborator of these projects.

(8) MDL: The Submarine Launch Facility will facilitate launching of Submarines directly independent of availability of deep dry dock and MDL shall not be dependent on Naval Dockyard or Dry Docks available with Mumbai Port Trust.

With increase infrastructure MDL can undertake concurrent construction of submarines and have work progressing on 11 submarines in various stages of construction at any given point of time.

The construction of new Security complex will result in streamlining the flow of men and material due to which the material will be delivered in

time and the bottlenecks in the logistics will get reduced, which will help in expediting the production activities related to Warship Construction.

Future modernization plan will help MDL accommodate vessels of larger dimensions and build Next Generation Destroyer for the Indian Navy. It will also cater for construction and repairs of large warships and commercial vessels.

(9) MIDHANI: About ₹ 800 crore Capital expenditure has been planned for next three years towards modernization. Details of the modernization plan of major items are as mentioned below:

(All values in ₹ crore)

Sl Name of the Estimated Impact of Modernization Status No project Cost 01 Wide plate Mill 471.64 Exclusive in-house facility for Order placed for wide plates of various alloy type equipments and to improve the yield of the facility under erection material. 02 New VIM 8T & 38.37 Increase the Melting capacity to Order placed. related Facilities accommodate future demand of Expected to be Special steel and super alloys. completed October 2020 03 Casting Facilities 32.47 To increasing capacity for Skull Melting furnace indigenous production. order placed. (Major item) 04 Melt shop 14.44 To reduce production down Order placed of Modernization & time. major equipments Pumps 05 Forge shop 34.77 To reduce down time, Energy Order placed of Modernization consumptions major equipments and expected completion July 2021 06 Armor Project 28.98 State of art armour Order placed and manufacturing facility is being Supply of Major setup at IMT Rohtak equipment to be Products – Bullet Proof Jackets, completed October Vest, Shield, Morcha& Bullet 2020 Proofing of Vehicles 07 Spring Project 28.45 To enter new markets – railways Order placed and etc. erection under progress, expected to be completed June 2020 08 Metal Powder 34.00 To capture India market for Under Tendering Project consultancy 09 Iso thermal 10.97 To enhance value added Order Placed and Forging facility product like disc for adour commission under engine which will help to reduce progress expected import completion June 2020

10 New Titanium 48.00 To capture export market Major furnace Shop demand. procurement is under tendering and balance facilities procurement will be done in 2020-21 11 BWD Mill 42.94 Enhance the capacity Finalization of offer April 2020 12 End Fitting facility 13.29 To accommodate Future Under Tendering demand

The above facility will enable MIDHANI to enhance the capacity, cost competitive, increase export market share and meeting the customer requirements with latest technology and equipment.”

International Competition

6.8 The Committee desired to know whether any comparative study has ever been made by the DPSUs to assess as to how their products are comparable with the leading international manufactures in the field. The Ministry replied as under:-

“(1) HAL: The majority of HAL’s products are made based on Staff Requirements. While formulating the Requirements, the Service HQ makes an assessment of the operational needs, state-of-the-art and comparable products in the international markets. Hence, at a very basic level, the technological benchmarking are done even while the Staff Requirements are drawn up and hence these HAL products are comparable in performance to their international equivalents. To cite few examples, some highlights of some of the major HAL platforms, in comparison with international products are as follows:  The Light Combat Aircraft (LCA)-Tejas, is the smallest and lightest multi-role supersonic single engine fighter aircraft in its class. The performance parameters of LCA Tejas are comparable with that of F16 and Gripen, the other options from the international market being considered for single engine fighter aircraft. Further, LCA structure has a higher percentage of composites compared to F16 and Gripen, making it the lightest aircraft among the three.

 The Basic Trainer Aircraft HTT-40 under Design and development at HAL has features such as 0-0 ejection capability, Ground and In-Flight Severance system, role adaptability to armed/ weaponised version if required etc which are not offered in Pilatus PC-7 aircraft, currently available with the IAF. The HTT-40 platform has demonstrated

compliance to all PSQR requirements, including 6-turn spin and is moving closer to certification.

 The indigenously designed and developed 5.5 ton class Advanced Light Helicopter (ALH) Dhruv is a proven platform with over 280 helicopters produced so far and having clocked more than 2.6 lakh flying hours. Dhruv helicopter is suitable for high altitude operations over 19,000 ft. It has time and again proven its capability in evacuation and rescue during natural disasters. Dhruv was used in airlifting soldier Lance Naik Hanumanthappa from Siachen glacier in February 2016, who was trapped under the snow for more than five days.

 The dedicated attack helicopter LCH, can perform comparable roles like Apache and Mi-24, and exhibits superior performance at higher altitudes. LCH is the only attack helicopter which can operate above 10,000-12,000 ft. altitude with considerable load of armament and fuel. LCH has attained Operational Clearance for both IAF and Army variants. HAL has submitted quotation for 15 LCH against RFP in March 2018 and is awaiting orders.

 The Light Utility Helicopter (LUH) is a 3 ton class helicopter under advanced stages of development at HAL, is planned to replace the Cheetah/Chetak helicopters in operation with services. LUH is comparable with its contemporary helicopters in the world.

Presently HAL’s Exportable Platforms like ALH MK-III–Dhruv and Do-228 are supplied to overseas customers like Mauritius, Seychelles, Nepal and Maldives and are successfully operating.

Apart from above, ALH-Mk-IV and Light Combat Helicopter (LCH) in the rotary wing side and Light Combat Aircraft (LCA)-Tejas in fixed wing segment have also been added to the basket of HAL’s exportable platforms. In the near future, Hindustan Turbo Trainer (HTT)- 40 and Light Utility Helicopter (LUH) will also be pitched for export.

(2) BEL: Prior to launch of a new product development, detailed study and analysis of the customer requirements is carried out. Also the benchmarking study is done with the available similar products in the global market. Based on these, the approach and methodology for design is finalized. The products supplied to the customer are comparable with international manufacturers.

Similarly, whenever, BEL attempts to market its products to any new international markets, a detailed Market study is carried out with respect to the equivalent products available, their features, pricing etc.

(3) BEML: Comparative study, comparing its products with international manufacturers is a routine practice to develop the products in line with market requirement and to have matching competitive edge over competitors. The market is scanned on a regular basis by the R&D group in association with the Marketing group to understand, imbibe and develop the technological innovations being brought out by the international players. Proactive innovations are also undertaken in line with the changing customer expectations. The Company has its own world-class composite R&D establishment and is engaged in for Design and Development of products and continuous upgradation of existing products to meet customer requirements. The R&D expenditure is around 2~3 percent of its turnover. Over 65 percent of sales turnover is through in-house R&D developed products. BEML has given major thrust to Self-Reliance and already achieved indigenization levels of over 90 percent in the mainline Mining and Construction products, Rail coaches and Eelctric Multiple Units (EMU), over 80 percent in High Mobility Vehicles (HMV) and over 60 percent in Metro cars. Further efforts are underway to reach higher levels. (4) BDL: Product needs are finalized by the customer, based on which ToT is entered into by MoD. The Indigenously Design Developed Manufactured products are competitive in international market as well as world class in nature. In case of DRDO products, customer needs are assessed and product specifications are finalized by DRDO in consultation with customers.

(5) GRSE: M/s Price Waterhouse Coopers, India conducted Benchmarking Study of all 5 CPSU Shipyards {namely MDSL, GRSE, GSL, HSL under Ministry of Defence and Cochin Shipyard Limited (CSL) under Ministry of Shipping} on comparative study to assess products and capability with the leading international manufactures in the field. The Report on Benchmarking was completed on 15th March, 2014. While some of the recommendations of the report have since been implemented, other relevant aspects are also being put in place in a progressive manner.

(6) GSL: Benchmarking study by M/s Price Water Coopers reveals GSL ‘build period’ of Offshore Patrol Vessels (OPVs) of 36-42 months are comparable with the International Shipyards of repute. Further, GSL has been able to reduce ‘build period’ in latest projects, exhibiting high productivity and best practices adopted in the Yard.

(7) HSL: No comparative study has been made by HSL in this regard. However, the ships built by HSL are testimonial to the quality of

workmanship of the yard. All the ships built are subject to many quality checks by classification societies and Customers before they are put into operation.

(8) MDL: Yes, MDL has conducted an international benchmarking study with the help of a consultant exercise to take appropriate steps to improve efficiency and reduce costs and to benchmark their performance with the best organizations in the private sector globally. On the basis of benchmarking exercise done by the consultant, some of the industry best practices are being adopted and customized.

(9) MIDHANI: MIDHANI is only manufacturer of Titanium alloys and largest manufactures of super alloy in India and supply to strategic application where stringent quality is required. MIDHANI product quality is par with international manufacturer and maintains international quality standards like ISO and AMS.”

Expenditure on Research and Development (R&D) by DPSUs

6.9 The total expenditure on R&D (as percent of Value of Production) for the last three years in respect of all DPSUs is as under:

Name of 2016-17 2017-18 2018-19 DPSU HAL 7.51 9.18 7.89 BEL 8.41 10.22 9.03 BEML** 2.75 3.09 2.04 BDL 0.70 0.86 1.64 GRSE 1.42 0.83 0.85 GSL 0.96 0.75 1.22 HSL 1.7 0.86 0.81 MDL 2.18 1.67 1.83 MIDHANI 2.02 2.21 3.68

** BEML is spending much larger amount in order to develop new products to have a competitive edge over the competitors and sustain the market share. R&D expenditure as a percentage of sales is on an average 2.63 percent of the sales in the last 3 years which is in line with the international standards in the sectors it operates.

The total expenditure on R&D (as percent of Profit after Tax) in respect of all DPSUs is as under:

Name of 2016-17 2017-18 2018-19 DPSU HAL 49.10 81.13 64.15 BEL 50.19 70.62 55.89 BEML 92.47 78.83 111.39 BDL 6.62 7.6 12.63 GRSE 107.84 12.11 10.66 GSL 8.25 4.64 7.85 HSL 19.90 26.49 13.33 MDL 14.04 17.07 16.44 MIDHANI 11.02 11.84 22.69

Achievement of Targets

6.10 When asked to furnish data with regard to targets fixed and achieved during last five years for each DPSU, the Ministry furnished the following information:

“(1) HAL: HAL is rated Excellent against the MOU signed with MoD for the last five years.Sales targets set in the MoU and actuals are depicted below:

(₹ in crore)

Year Target Achieved 2014-15 14900.00 15621.18 2015-16 16000.00 16586.00 2016-17 16600.00 17951.85 2017-18 17600 18519 2018-19 18000 19894

(2) BEL: The details of sales target fixed and achieved is tabulated below: (₹ in crore) Year Target* Achieved 2014-15 6,833 6,695 2015-16 7,050 7,541 2016-17 7,300 8,825 2017-18 8,600 10,085 2018-19 9,700 11,789

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* MoU Targets for 'Very Good" Rating.

For the year 2014-15, though BEL could not achieve the set target for 'Very Good' rating, the achievement is above the target set for 'Good' rating (₹ 6,491 crore). However, it is pertinent to mention here that the major factors attributed to the short fall in achieving the targets during 2014-15 for 'Very Good' rating include non-receipt of some of the anticipated orders planned for execution during the year viz, WLR, Missile Warning System (MWS) and LRF LH30, Contract amendment for Low Level Light Weight Radar (Aslesha), Non-Availability of Tatra Trucks etc.

(3) BEML: The Targets fixed and achieved during the last 5 years is as below: (₹ in crore)

Year Target Achieved 2014-15 3600 2809 2015-16 3800 2981 2016-17 3150 2499 2017-18 2900 3000 2018-19 3246 3481

# Target and actual are net of interest and other income (operating turnover), sales turnover does not include excise duty, custom duty, VAT or any other tax, duty, etc. as per definition of MoU guidelines 2017-18. The Company could not achieve the MoU targets during 2014-15 to 2016-17 due to the Market Situation and Business Environment arose in Mining and Construction Business Group, Constraints in execution of Orders in Defence Business and No Rail Coach Order in Rail and Metro Business Group. The detailed reasons are as under: Mining and Construction vertical:  Recession in Mining and Construction segment both in domestic and global markets. Due to the above production was moderated, considering Finished Goods Inventory (FGI) on hand and aligning with market requirements which had direct impact on profitability.  Delay in tenders from Coal India Limited and its subsidiaries.  Rope Shovel and Walking Dragline equipment Business was lost as our collaborator Company was taken over by our competitor. However, we are pursuing with Coal Companies for development of indigenous Rope Shovels.

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Due to the above, Mining and Construction Business was down by almost ₹ 250-300 crore compared to previous years. Defence vertical: The constraints faced in the Defence vertical continued to severely affect the Business. The reasons attributable are as follows:  Inconsistency in supply orders and Low volume of Orders  Non-receipt of bulk production clearance for Sarvatra  The constraints in respect of Armoured Recovery Vehicle (ARV) contract execution.  Delay in Bulk Production Clearance (BPC) for supply of Command Post Vehicle.

It can be observed that due to above constraints in Defence Business, Company's turnover was down by more than ₹ 250 crore. Rail and Metro vertical: The Rail and Metro Business that had achieved a sales turnover of ₹1370 crore in the year 2013-14 (44 percent of Company's turnover) dropped down to a turnover of ₹ 567 crore in 2016-17 (20 percent of the Company's turnover). The reasons are due to the following:  The Company also depends on orders for Rail Coaches, Electrical Multiple Units (EMUs) and Overhead Equipment (OHE) from Indian Railways and used to execute over 600 Nos. valued around ₹ 400 crore with a contribution of over ₹ 100 crore against an established capacity for producing around 720 coaches every year. From the year 2014-15, no Rail coach order were placed to BEML which severely affected the financial of the Company.  BEML has executed sub-contract order of DMRC RS-10 from the year 2016-17 with free material supply due to which there was no increase in top-line.

(4) BDL: (₹ in crore) Financial Year Target Achieved 2014-15 2721 2780 2015-16 3740 4160 2016-17 4400 4867 2017-18 5300 4588 2018-19 4600 3069

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For the Year 2017-18: Reasons for not achieving the target is as follows: i. Akash SAM: As a part regular batch acceptance test, Booster Grain was static tested whose results were not satisfactory. Based on the recommendation of Failure Analysis Board (FAB), the production of Booster grain at supplier end and integration of Missiles at BDL was put on hold. Subsequently production of Booster Grains based on acceptance criteria given by Failure Analysis Board (FAB) stated and integration activity at BDL commenced in August 2017.

Further in a similar batch acceptance static test conducted for the other explosive item “Sustainer Grain” Oct/Nov 2017, the grains underperformed and Failure Analysis Board (FAB) was again constituted. The FAB has concluded and recommendations were accepted by Competent Authority and production progressed in BDL. Due to above technical reason, BDL could not meet the set target. ii. KONKURS-M: Partial availability of explosive items limited supply for the year 2017-18. The Orders were placed on OEM for supply of Explosive items. Partial supplies were received and to that extent missiles completed. Due to above technical reason, BDL could not meet the set target.

For the year 2018-19: The reasons for unachieved targets are the numerous delays that arise in receipt of input material from sub-contractors etc. Another reasons for delay is that there are several occasions when the project Team of Defence Research and Development Laboratory (DRDL) modify the design from time to time as per the requirement. There is reduction in value of sale in the year 2018-19 due to the following: Akash GSE: Because major portion of Ground Support Equipment were executed in 2017-18 itself and the balance order book of GSE amounting to ₹ 526 crore, out of which ₹ 269 crore executed in 2018-19 and balance ₹ 257 crore will be executed in 2019-20. There is no further order.

Milan -2T and Refurbishment: During 2017-18, BDL had firm order of Milan 2T and Refurbishment whereas in 2018-19 there was no firm order of Milan-2T and Refurbishment. Further Order for Milan-2T and Refurbishment is awaited.

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(5) GRSE: (₹ in crore) Year Target Achieved 2014-15 1800 1613 2015-16 1890 1661 2016-17 1800 928 2017-18 1350 1345.52 2018-19 975 1378.77

Reasons for unachieved targets are as following: Reduction in Turnover during FY 2016 -17

During FY 2016-17 the Company achieved a turnover of ₹ 927.84 crore as against ₹ 1800 crore (MoU Very Good Target) due to the following reasons-

(a) Reduction in Value of Production (VoP) is due to the fact that the current projects were in the final stages of execution, wherein, conventionally the rate of increase of Value of Production tends to saturate.

(b) The shipyard delivered four (04) ships instead of six (06) planned during the financial year 2016-17.

The reasons of delay in delivery of Mk-IV, LCU project are enumerated below:-  Numerous Design Challenges were observed in the sea trials and major modification of the underwater hull was undertaken. This was followed by a series of sea trials leading to delay in the delivery of the first LCU.  Cascading effect of the first ship on other ships of this series.  Failure of the customer nominated vendors to work concurrently on multiple ships, major modifications / defect rectification by OEMs for proving their equipment as well as delay in readiness of modular compartments, CO2 System and Integrated Platform Management Systems (IPMS) by the Indian Navy nominated firms were the major reasons towards delay in delivery of Mk-IV, LCU project.

Delay in delivery of P-28 (3rdand 4th ships) Anti-Submarine Warfare Corvette are for the following reasons:  Introduction of Carbon Fibre Superstructure by the Indian Navy for the first time on any warship of India was taken up for the 3rdand 4th ASW Corvettes and the shipyard faced numerous technological challenges for integration of the same with steel structure which resulted in significant delay.

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 Cascading effect of previous ships of this Class.  Delay due to inadequate support by DCNS, France  Delayed supply of Pole Mast Adaptor by SAAB.  Delay in the readiness of CO2 System and Diesel Generators by the Indian Navy nominated Firms.  Additional requirement of Indian Navy for completing weapons and sensor trials before delivery.  Approval of a large number of modifications at the last stage to be completed before delivery.

(d) Cascading effect of above substantially reduced progress of other ships of the above projects thereby affecting VOP.

(e) The VOP target of Portable Steel Bridges could not be met as GRSE did not receive the targeted orders.

(f) The VOP target of Diesel Engine Plant (DEP) Ranchi also could not be achieved due to non-receipt of order for Overhauling and Testing of Marine Diesel Engines of INS Topaz.

(g) The VOP target of Deck Machinery could not be achieved due to non- receipt of order for Rail Less Helo-Traversing system for P-15B ships for MDL.

(6) GSL: (₹ in crore) Year Target Achieved 2014-15 550.00 569.55 2015-16 620.00 725.96 2016-17# 760 1055.45 2017-18 1000.00 1373.43 2018-19 950.00 905.61

Note: The target for turnover was fixed in terms of Value of Production (VoP) upto FY 2015-16.

# From FY 2016-17 onwards, the target for turnover was fixed in terms of Revenue from Operations which is equal to the sum of Value of Production and Other Operating Income.

(7) HSL: HSL VoP target and achievements during last five years as below:-

(₹ in crore) Year Target Achieved 2014-15 650 294.16

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2015-16 650 593.29 2016-17 600 629.05 2017-18 600 644.78 2018-19 620 595.00

During the year 2017-18, HSL achieved a total income of ₹ 651.67 crore and a Value of Production of ₹ 644.78 crore which have been the highest and the third best since inception of the company respectively.

The decrease in Value of Production during FY 2018-19 is mainly attributable to extremely low shipbuilding order book position of ₹ 132.17 crore as on 31 March, 2018. However, with the signing of contracts for construction of 2 Nos. Diving Support Vessels worth ₹ 2390 crore and 4 Nos. 50 T BP Tugs worth ₹ 260 crore for Indian Navy in the end of FY 2018-19, the order book position of the shipyard has improved. These projects are at initial stages of construction and therefore a value of production of ₹ 595 crore could be achieved. It is pertinent to mention that even with this low VoP, HSL could achieve a net profit of ₹ 36.24 crore during FY 2018-19 as against ₹ 20.99 crore reported during FY 2017-18. This could be made possible due to increase in productivity, decrease in overheads and various expenditure control and austerity measures adopted by the company.

(8) MDL: The data pertaining to targets fixed and achieved during last five years for Value of Production (VOP) / Revenue from Operations (ROP) is as follows-

(₹ in crore) Year Target Achieved 2014-15 3,300 3592 2015-16 3,675 4122 2016-17 4100 3530* 2017-18 4500 4410* 2018-19 4500 4649

*Targeted VOP was not achieved in 2016-17 and 2017-18 due to delay in scheduled equipment delivery for ongoing projects.

(9) MIDHANI: (₹ in crore) Year Target Achieved 2014-15 590 647.38 2015-16 650 716.50 2016-17 700 773.28 2017-18 780 661.69** 2018-19 750 710.85**

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** MIDHANI could not attain growth in sales turnover due to non-availability of critical equipment, major being 1500T Forge Press and some furnaces on account of planned major revamping.”

Production in DPSUs

6.11 The Committee desired to be apprised of the details of DPSUs which are facing the problem of lack of orders resulting in decline in production in the current/coming years. In this regard, the Ministry of Defence submitted as under:-

“(1) HAL: HAL’s production over last several years has been growing with highest turnover recorded in the last financial year 2018- 19. However, the major part of existing orders for supply of aircraft and helicopters will be liquidated shortly with the major manufacturing order of Su-30MKI being completed in 2019-20. There is no firm order currently available on the company beyond 2021-22. The existing facilities at HAL face the challenge of idling and production will show a declining trend for want of confirmed orders. Also, continuity in production orders from Armed Forces is essential to sustain production growth.

Orders for supply of 83 LCA Mk1A and 15 LCH (Light Combat Helicopter) are expected for which HAL has already submitted quotations. An additional order for 12 Su-30MKI is also expected in the near future. As the cycle time for production of an aircraft varies from 18 months to 36 months, however, even with these orders in the pipeline, the established capacities will not be fully loaded. Aerospace manufacturing being a niche strategic segment, the growth and establishment of which involves careful nurturing over years. To avoid this situation, expeditious measures need to be initiated, considering cycle time of 18-36 months in the aircraft industry. The effect of underutilisation of HAL facility will have a cascading effect from two major vantage points. Low workload at HAL will in-turn lead to low workload scenario in many support manufacturing industries, considering that close to 30 percent of the HAL man-hours is being sourced through Indian private sector manufacturing partners including MSMEs. This will be a challenge to the huge defence manufacturing ecosystem in the country, nurtured by the company. Further, the skilled manpower if left to idle for long will be an irrecoverable loss leading to lowering the overall skill base in the country.

The LCH platform has attained IOC for both Airforce and Army variants and is fully ready for operational induction awaiting orders. The Basic Trainer Aircraft, HTT-40 under development at HAL has

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demonstrated compliance to all PSQR requirements, with the successful demonstration of 6-turn spin during trials in Sep – Oct 2019 and is moving closer to certification. Similarly LUH has also completed all major tests, including H-V envelope evaluation, towards Basic Operational Clearance of LUH. Document towards Initial Operational Clearance were submitted to User and RCMA during Dec 2019 and the IOC has been granted by CEMILAC to HAL on 7th February, 2020 during DefExpo 2020 at Lucknow. Two Do-228 civil certified aircraft have been manufactured and are available for supplies.

HAL is expecting additional orders for on-going programs like ALH, LCA, Hawk, Do-228 and SU-30 MKI and fresh production orders for new platforms like Do-228 Civil variant, LCH, HTT 40, LUH and Hawk-i. These anticipated orders once materialized would help in sustaining the growth of organization in the coming years. (2) BEL: BEL has a robust order book of around ₹ 54,950 crore (as on 1.1.2020) and likely to grow further in coming months. At present, BEL does not envisage any decline in production in the current/coming years.

(3) BEML: As far as BEML Limited is concerned the orders received from MoD in the last 3 years is as below:

Year Value in ₹ in crore 2016-17 145 2017-18 64 2018-19 Nil 2019-20 (till date) 45

However, Bulk Production Clearance (BPC) for Sarvatra projects have been received and order worth ₹ 527 crore will be serviced during 2019-20 and 2020-21. Further, constraint regarding execution of ARV project are being resolved and order worth ₹ 1400 crore will commence from 2020-21 onwards and completed by 2023-24. Orders from MoD is also expected for supply of vehicles worth ₹ 715 crore for PINAKA Project. Orders are also expected from BEL / BDL / ITI for supply of Heavy Duty Trucks.

(4) BDL: BDL is facing problems of lack of orders as explained below: In order to meet the enhanced requirements of Indian armed forces, BDL has augmented its production capacities and successfully fulfilled the requirements. In the process, BDL has invested considerably in creating world-class infrastructure, weapon system

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complexes, state of art facilities for manufacturing new generation weapons that envisioned to the needs of Indian Armed Forces.

Most of the major products like Akash Weapon system will be executed by 2019-20, Invar ATGM and Konkurs-M ATGM will be executed by 2020-21 leaving the huge workforce without work. There are no firm order executable beyond year 2020-21. In cognizance with the facts stated above, BDL order position is not sustainable beyond year 2020-21. The orders in pipeline which needs to be expedited are as follows:

a) Milan-2T b) Konkurs-M c) Akash 3 and 4 Regiment. d) Akash 7 Squadron and Akash Direct IAF, e) Astra, f) Nag, g) APATGM, h) VSHORAD i) Refurbishment.

(5) GRSE: The Order Book position of GRSE as on 30th September, 2019 is ₹ 27,406 crore pertaining to 06 ongoing major shipbuilding projects of Indian navy and Indian Coast Guard. However, 03 projects of Indian navy and Indian Coast Guard will get completed in next 03 to 04 months leaving the shipyard with 03 No. of projects of Indian Navy for construction of 15 ships against capacity of 20 ships construction. More orders will help the shipyard to utilise its capacity fully.

(6) GSL: GSL is presently executing the 05 CGOPV project with balance executable order book of ₹ 800 crore which would get liquidated by 2020-21. GSL is in receipt of another order for two Missile Frigates which are in the initial stages of design. Further, GSL has received order for two LPG Cylinder Carrier Vessels and one Ferry Boat, which are in the different stages of production. The order book presently stands at ₹ 15,000 crore including the aforesaid Shipbuilding and General Engineering Services (GES) projects and Ship repairs.

Decline in VoP is due to interim low order book position as Project 1135.6 is at design stage, delay in finalization of Mine Counter Measure Vessels (MCMVs), for which GSL infrastructure is ready and delay in contract conclusion of Ministry of Home Affairs (MHA) boats. The growth in production is expected to increase from 2021 onwards post commencement of production of 2 Frigates however the infrastructure capacity utilization will be low at 40 percent for Steel and Aluminium line of production as there are no new orders for optimum utilization of total

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of 14 Berths/Jetties. Also delay in finalization of MCMV project is resulting in non-utilization of GRP facilities already created under Infrastructure Augmentation plan for MCMV.

Notwithstanding this, GSL is making concerted efforts to secure short gestation projects in Domestic, Export, GES and Ship Repair segments, which will help in minimizing the potential impact due to lean executable orders to bridge the gap till the significant VoP contribution from Frigates and MCMV Projects.

(7) HSL: The order book position of HSL is low when compared with other Defence shipyards resulting in under-utilization of the installed capacity of the shipyard. The balance order book value is ₹ 2772.28 crore as on 31 December, 2019 and it comprises of the following projects:-

Balance Order Contract Sl Delivery Value as on Project Customer Value No Date 31 Dec 19 (₹ crore) (₹ crore) Shipbuilding 1 11184 (Support 31 Jan -- 1169.50 39.01 Vessel) 2020 2 Diving Support Indian Sep 2021 2392.94 2349.32 Vessel (2 Nos) Navy Mar 2022 3 50 T BP Tugs Aug 2020 (4 Nos) Indian Nov 2020 260.72 237.19 Navy Feb 2020 May 2021 4 Flap Gates (3 Naval Mar 2020 Nos) Dockyard Jun 2020 20.72 19.40 (Visakha Sep 2020 patnam) The shipbuilding facilities will be idling from Mar 2022 onwards after completion of the project ‘2 Nos Diving Support Vessels’. Submarine Refits 5 Normal Refit of Indian 31 Jan 533.61 8.28 INS Sindhuvir Navy 2020 Major part of the refit of ‘INS Sindhuvir’ has been completed and presently equipment/ systems trials are under progress. The submarine will be delivered in last quarter of FY 2019-20 resulting in idling of the submarine refit facilities of the shipyard from Feb 2020 onwards Ship Repairs 6 INS Sutlej Indian 75.82 May 2020 43.82

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Balance Order Contract Sl Delivery Value as on Project Customer Value No Date 31 Dec 19 (₹ crore) (₹ crore) Navy 7 INS Sujata Indian Aug 2020 73.96 73.96 Navy 8 MFV Fishery Jan 2020 Samudrika Survey of 0.986 0.50 India 9 MFV Fishery Jan 2020 MastyaShikari Survey of 1.6 0.70 India Total (₹ in crore) 2772.28

As is evident from above, the balance orders are likely to be completed by end of March 2022. HSL, which has recently turned around and started making profits may find it difficult to sustain the growth outlook in the absence of immediate new orders.

Idling of Submarine refit facilities of HSL

HSL has requisite capability, infrastructure and spare capacity for executing EKM class submarine refits. As part of capability enhancement, HSL has signed a comprehensive MoU with United Shipbuilding Corporation (USBC) of Russia to provide complete technical-logistics support for such works / refits / upgrades. Major part of the ongoing Normal Refit of INS Sindhuvir has been completed and presently equipment/ systems trials are under progress. The submarine will be delivered by end January 2020 resulting in idling of the submarine refit facilities of the shipyard from February 2020 onwards. HSL has requested IHQ, MoD (N) to consider the shipyard for issue of RFP for MR-MLU/MR/NR/SR of all Russian origin ships/ submarines. However, much against the indigenization intent of Government of India, the Medium Refit Life Certification (MRLC) of 3rd EKM submarine has been awarded to Russia against the initial DAC decision. Due to this shift in decision, HSL has been deprived of securing another submarine refit order which was earlier anticipated. However, in accordance with the directives of DAC, MRLC of the 4th EKM submarine was scheduled to be undertaken in India with the OEM assistance. HSL is putting its best efforts to bid for MRLC of 4th EKM submarine ‘INS Sindhughosh’. It is requested that the MRLC of 4th EKM Submarine may please be undertaken in HSL / Indian Shipyard and not send it to Russia. This will support the objective of Make in India policy of GoI, provide encouragement to MSMEs and will also help in retaining the expertise developed in refit of EKM class submarines and optimum utilization of idling submarine refit facilities of the shipyard which will become idle from February 2020 onwards.

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Optimum utilization of shipbuilding installed capacity

Indian Navy through MoD in 2007 had proposed transfer of M/s HSL from MoS to MoD, that was approved and effected in 2010. During this period HSL was asked not to take any commercial orders so as to be able to channelize all resources on Defence Orders that would be given post transfer. It is also noteworthy that 2008 to 2012 was a boom period in shipping Industry that HSL missed in view of this directive. Subsequently, post transfer on 22 February, 2010, following orders were given on nomination basis and subsequently all of these have been cancelled except FSS. This has caused tremendous Business opportunity loss to HSL.

 LPD 04 Nos,  P-75(I) - 01 submarine and  SOV - 02 Nos.

Fleet Support Ships. HSL has also been nominated by MoD for construction of 05 Nos. Fleet Support Ships (FSS) worth about ₹ 9000 crore for Indian Navy. M/s Anadolu Shipyard (ADIK) Istanbul, Turkey emerged as the lowest bidder towards the global RFP floated by HSL for selection of collaborator for 05 Nos Fleet Support Ships (FSS) project. Negotiations were conducted till end September, 2019 for finalization of the contract with foreign collaborator. All through the process, IHQ / MoD, MoD / DDP and Board of Directors have been kept informed on regular basis. However, MoD has directed HSL to put the FSS project on temporary hold in view of the recent diplomatic developments with Turkey. HSL inputs regarding the legal and financial implications of cancelling the bid of M/s Anadolu shipyard, Turkey have been submitted to MoD (N) on 04 October 19. HSL vide letters BD/FP/FSSRFP/9201008 dated 07 December, 19 and BD/FP/FSSRFP/9201010 dated 10 December, 19 requested MoD (DDP) to communicate the decision at the earliest with regard to lifting of “hold” to enable expeditious progress of the contract conclusion formalities with M/s Anadolu shipyard, Turkey in order to sign the contract with Navy for construction of FSS.

P-75 (I). Adani Defence System and Technolgies Ltd (an Adani group company and a subsidiary of Adani Enterprises Ltd) in collaboration with HSL submitted the response to EoI for P 75 (I) on 11 September, 19. As part of evaluation, EPC team from MoD visited HSL on 30 October, 19 and was to submit a report regarding qualification of applicant companies for issue of RFP by 30 November, 19. The draft JV between HSL and Adani has been formulated outlining all the legal terms with due diligence and vetting by M/s Ernst and Young. Towards protecting the interests of HSL, JV agreement restricts participation of firms only in the P-75(I) with a shareholding ratio of 51: 49 (Adani: HSL) and HSL is free to exit from the JV prior submission of bids. Therefore there is an urgent requirement of approval by MoD on the JV proposal forwarded by HSL vide letter SM/SSS/BDVP/1200 dated 05 November 19 to enable submit credentials of JV to the acquisition wing of MoD and attain eligibility for issuance of RFP. It is requested that formation of Joint Venture

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between HSL and M/s Adani be approved to enable submission of JV credentials to Acquisition wing towards qualifying the EoI for participation in the P-75(I) project.

Special Operation Vehicles (SOVs). A considerable amount of effort has also been made over the years to engage all potential global OEMs, and finalise a RFP that meets the requirement of Indian Navy as well as the OEMs. The RFP is currently with IHQ/DSMAQ for approval. With cancellation of SOV, HSL again misses the opportunity to convert its negative net worth and improve its financial rating, because of which HSL is not able to bid for Export orders, SCI orders, ONGC orders and Indian Navy orders requiring A+ rating (NGMV, NGOPV, NGCorvettes).

In view of above, Indian Navy and DAC may kindly be requested to approve suitable ships construction order on nomination to HSL to offset cancellation of above mentioned three DAC approved nomination orders.

Ineligibility to participate in domestic and international tenders

HSL is a green-field shipyard on the eastern coast, having capability to construct and repair all kinds of ships and submarines. It is pertinent to mention that HSL has completed all the legacy projects (13 Nos) pending since 2010 during the last four years. HSL has recently turned around and started making profits. However, following issues are hindering the performance of the shipyard:-

(a) Ineligibility to participate in international tenders. HSL is ineligible to participate in international tenders and execute export orders due to its negative net worth. Despite strong growth momentum and after having posted operating and net profits for the past four consecutive years, the shipyard’s negative net worth resulting from legacy issues is yet to be completely neutralized. Although the yard’s negative net worth has been improved from over ₹ 1000 crore to less than ₹ 600 crore, it has been an impediment in participating in tenders for export orders. The Shipyard has submitted a proposal for Revised Financial Restructuring with Nil cash outflow to GoI and requested approval of MoD which will help the yard to attain positive net worth and participate in international tenders.

(b) Ineligibility to participate in certain domestic tenders. Defence Procurement Policy (DPP) 2016 has been amended by including Financial Assessment parameters (CAT F1 to CAT F5) as Annexure II to Appendix C to Chapter IV and Appendix O to Schedule I of Chapter IV. With the proposed rating criteria, the Shipyard is eligible to participate only in CAT F3 and is ineligible to participate in CAT F1 and F2 due to stipulated credit rating ‘A’. RBI approved rating agency ICRA has assigned [ICRA] BBB+ to HSL. The relatively low credit rating is mainly due to negative net worth and legacy liabilities. Despite having one of the best operating parameters and infrastructure, HSL does not meet the eligibility criteria due to its legacy liabilities. The financial restructuring proposal

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with NIL cash outflow to GOI to enable shipyard to achieve positive net worth is under active consideration of MoD, which will improve HSL’s credit rating. In the interim, HSL has requested MoD to amend the Minimum financial eligibility credit rating of the shipyard to ‘BBB’ for CAT F1 and CAT F2 to enable HSL to participate in forth coming RFPs indicated below till approval of financial restructuring proposal of HSL.

 Next generation OPVs – 08  Next generation corvettes – 07  Cadet Training ships – 03

(8) MDL: Capacity - MDL yard in Mumbai has an in-house capacity to undertake simultaneous construction of 10 Ships and 11 Submarines in different stages post modernization. Currently 8 warships and 4 Submarines are in different phases of Construction / Trials.

Warships Submarines Activity Qty (Nos) Activity Qty (Nos) Production / 3 Pressure Hull 3 Fabrication in Shops Fabrication in Shops Block Assembly on 3 Structural & 5 Slipways Engineering Outfitting in Shops Structural Outfitting in 1 Structural & 1 Dry Dock Engineering Outfitting in Dry Dock Engineering Outfitting 3 STW / HATs / SATs 2 in Wet Basins in Wet Basins Total Warships 10 Total Submarines 11

Idling Capacity (Spare Capacity)

Shipbuilding - As regards to shipbuilding division of MDL, the fabrication and assembly facilities have started idling from the current year and will gradually increase further. Considering the completion of existing ship construction projects in phased manner during next 4 to 5 years, the idling of ship construction facilities and infrastructure would increase to a substantially high level.

Submarine – Currently, several facilities are idling viz. Pressure Hull Facilities of Submarine (from 2012), the work related to Structural Fabrication and Structural Outfitting is reducing since mid-2014 and facilities will be idling from 2020 onwards. Also, infrastructure like New Wet basin, Cradle Assembly Shop and Submarine Section Assembly workshop remains un- utilized due to lack of fresh orders. This would further lead to loss of critical

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skill sets developed for Submarine and will stifle the trained workforce of various local vendors developed. Construction of 6 Submarines which will be completed by year 2022 and thereafter infrastructure created with approximately investment of ₹ 1000 crore by Government of India will be unutilised and idle.

Balance Capacity - MDL has an in house capacity to undertake simultaneous construction of 10 ships and 11 submarines at various build stages. Considering the status of ongoing projects, MDL can immediately undertake construction of 4 more warships and 7 more submarines.

(9) MIDHANI: MIDHANI has currently healthy order book position of around ₹ 1800 crore. Further, the orders in pipeline, discussion/soliciting with other prospective customers, projects, the order book will not be a constraint for 2020-21 and beyond.Order book position as on 01.12.2019 is as below:

Sl No. SECTOR APPROXIMATE VALUE (crore) 01 DEFENCE 257.33 02 SPACE 1343.19 03 ENERGY 87.73 04 OTHERS 118.47 05 TOTAL 1806.72

6.12 When asked about the steps that have been taken to arrest decline of production in DPSUs, the Ministry of Defence submitted as under:

“Steps taken by the Ministry to strengthen the Order book of DPSUs include:

(i) Buy (Indian- Indigenously Designed, Developed and Manufactured): In Defence Procurement Procedure 2016 under Capital Acquisition, preference is being given to Buy (Indian- Indigenously Designed, Developed and Manufactured). The order of preference/priority in decreasing order under this Procedure is categorized as follows: a) Buy (Indian - IDDM) b) Buy (Indian) c) Buy and Make (Indian) d) Buy and Make e) Buy (Global)

(ii) Reforms promoting defence exports: a) Scheme for funding marketing activities by Defence Attaches for promoting exports. b) Scheme for testing and certification of industry goods for export.

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c) Grant of “Fit for Indian Military Use” certificate to eligible industry to facilitate export. d) Fully automated export portal and electronic sharing of export leads with relevant industry. e) Dispensing with the requirement of End User Certificate by Government for exports of parts/ components. f) Simplified procedure for tender, exhibitions, testing, etc. g) SOP formulated to facilitate exports of ‘Munitions List’ under category 6 of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) by Directorate General of Foreign Trade (DGFT). h) Streamlining export using Line of Credit for items already sold to Indian military. i) Open General Export Licence (OGEL) for export of certain parts and components and intra-company transfer of technology to select countries.The OGEL is a one-time export licence to be granted to a company for a specific period (two years initially). j) Inclusion of 10 percentage points for defence exports in MoUs with Defence PSUs and fixation of annual export targets.

(iii) Defence Offset Reforms:

(a) Claims for defence offset were pending from 2005 onwards without resolution. With regular follow up and monitoring, the work pending for nearly 15 years was completed addressing a major complaint of defence industry in the country.

Till 31.3.2018 Till Oct 2019 Offset Discharge Claims 2240 M USD 2590 M USD Offset Claims verified and 88 M USD 1595 M communicated USD

(b) DDP has also launched a Defence Offset Portal for end to end online system for submission and processing of offset claims. All offset claims, w.e.f. May 1, 2019, will be received electronically in DDP.

(iv) Reforms promoting indigenization:

(a) Simplified Make-II Procedure notified in February 2018. So far, 44 proposals have been accorded AIP (Approval in Principle).Further, under Make-II Procedure, Standard Operating Procedure (SOP) for consideration of ‘suo-motu’ proposals of Capital Acquisition has been

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introduced in June 2018. As on date, 242 suo-motu proposals have been received by the three services, out of which 13 suo- motu proposals have been accorded Approval-in-Principle. Make-II Framework for implementation by Defence PSUs and OFB has also been issued in February 2019. The DPSUs and OFB have accorded approval of items to be taken up for indigenization under ‘Make-II’ framework as per details below: Name of Organisation No. of projects HAL 1213 BEL 13 BEML 1269 BDL 11 GRSE 1 GSL 1 HSL 2 MDL 1 MIDHANI 10 TOTAL 2521

(b) Insertion of 10 percent points in MoU of Defence PSUs for indigenization.

(c) Department has notified a new Policy for Indigenization of components and spares used in Defence Platforms in March 2019 with the objective to create an Industry eco-system to enable Indigenization of imported components (including Alloys and Special materials) and sub- assemblies for Defence equipment and platforms manufactured in India.

(d) New Policy for Indigenization was notified on by Department of Defence Production on 08 March, 2019 with the objective to create an industry ecosystem. It is estimated that Defence PSUs will reduce the import bill more than ₹ 15000 crore by 2022 through indigenization of products and processes.

(e) Development of Indigenization Portal for DPSUs/OFB are uploading the data on the link provided. The proposed Indigenization portal will be a centralized one in which DPSUs/OFB and other stakeholders will be showcasing their imported items to be indigenized. Vendor will become aware of the above items and they can in turn, show their interest in those items where they have capability to manufacture. (f) Study on savings in cost being taken up by Institute for Defence Studies and Analyses (IDSA), Delhi to study savings in cost due to indigenization in the last 5 years in DPSUs/OFB. (g) Long Term Orders –‘Framework for placing Long Term Orders by DPSUs’ has been approved by Hon’ble RM on 04 November, 2019.

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Under this framework, the procuring organization may aggregate demand of the item for a long period of upto 10 years, in cases where it finds challenges in indigenization. (h) Testing and Certification - MoD/DDP has issued Government Orders for testing of items being indigenized/ priority in testing and certification on 28 August, 2019. It covers aspects like use of test facilities for R&D without asking for End User Certificate, fixation of insurance cost, transparency in declaration of test results and minimizing delays. (i) Setting up Indigenization Fund in DPSUs/OFB - MoD/DDP has decided in consultation with MoD (Finance) that DPSUs/OFB will assign minimum 2 percent of PAT every year for indigenization fund. As DPSUs are under Company Act, advise from Ministry of Corporate Affairs on setting up this fund in DPSUs has also been obtained.  Degree of Indigenization achieved in Defence Platforms in the last 3 years is as under:

2016-17 2017-18 2018-19 72.4 76.3 75.9

(v) Reforms towards ease of doing business in defence:

(a) Third Party Inspection system approved in Land Systems and Aero platforms for effective administration of inspection function of outsourced work with involvement of third parties for inspection services.

(b) Scheme for awarding self-certification approved wherein Defence PSUs and Pvt. Industry have been delegated the responsibility of certifying the quality of products to the manufacturer on behalf of purchaser.

(c) Public Procurement Order for 112 items has been notified, thereby giving preference to domestic manufacturers in these items.

(vi) Supporting Technology, Innovation, Research and Development in DPSUs

(a) Developing Intellectual Property (IP) Culture in Defence PSUs and OFB: Mission Raksha Gyanshakti, launched in 2018-19, with the objective of creating greater Intellectual Property in defence production ecosystem, was able to train 12088 persons and file 730 IPs during the year. For 6 Defence PSUs, this was the first instance of filing any IP. The approved Action Plan for 2019-20, inter-alia, includes development of IP policy for DDP organisations, expanding the Mission beyond DPSUs/ OFB to private defence industry and armed forces and filing of 1000 Intellectual Property Rights (IPR) Applications by DPSUs/OFB.

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(b) Creation of Defence Artificial Intelligence Project Agency (DAIPA): DAIPA has been created in March, 2019 for greater thrust on AI in defence. AI roadmap has been formulated for each Defence PSU and OFB. About 25 new AI Technologies are being developed by DPSUs and OFB.

Defence Exports by DPSUs

6.13 The Committee have learnt that steps taken by the Ministry of Defence to promote defence exports include setting up of export promotion cell, expansion of role of Defence Attaches and creation of export action plans and strategies for all DPSUs and Ordnance Factories Board (OFB). The value of defence exports and imports as submitted by the Ministry over the last three years in respect of each DPSU is as under:

“(1) HAL: Defence export over the last three years from HAL is indicated below:

2019-20 2015- (upto FY 2014-15 2016-17 2017-18 2018-19 16 31/12/19) * Defence Export 299.08 255.42 239.86 148.81 210.54 114.59 (in ₹ crore)

Defence import over the last five years by HAL is indicated below:

2019-20 2015- 2016- 2017- 2018- FY 2014-15 (upto 16 17 18 19 30/09/19) * Defence Import 9938 7335 6326 6225 7679 3644 (in ₹ crore)

*provisional figures

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(2) BEL: The value of Defence exports during last three years is furnished below:

2018- Description 2016-17 2017-18 19 Defence Exports 360.01 102.31 78.73 (₹ crore)

BEL generally does not import fully finished Defence equipment. However, for the design, manufacture and supply of Defence equipment, the company resorts to imports only for some of the special components/Raw materials, proprietary items/sub-systems etc., (input material) that are not being manufactured in the country. The value of direct import of input material during the last three years is furnished below:

2018- Parameter 2016-17 2017-18 19 Direct Import 2,284 2,213 3,200

(3) BEML: The details of total exports and imports for the Company for the last five years is as follows:

(₹ in crore)

Exports (including Deemed Imports SI. Export) # Year No. Defence Non- Defence 1 2014-15 0.43 484* 413 2 2015-16 - 275* 619 3 2016-17 - 30 565 4 2017-18 - 28 602 5 2018-19 - 19 884

* Includes Deemed Exports towards supply of Metro Cars # the import content varies depending on the Product-Mix. The Company is also working towards 'ZERO IMPORT' policy of GoI and has released EoI for all imported items for localization. To boost indigenous content, BEML has plans to enter into Joint Venture (JV) with renowned MNCs for local production of

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defence spares and aggregates, cabin, high value metro car aggregates. For improving the geo-strategic reach and increasing exports, BEML is working on various business opportunities in Defence, Mining and Construction and Rail and Metro segments in SAARC and Africa.

Followings are the strategies adopted to enhance BEML’s export business:  Widening BEML’s Distributor Network in addition to direct sales  Brand building and visibility through exhibitions and seminars  Collaboration with other DPSUs/ Indian companies  Joint Ventures in India or with local firms in abroad  Utilizing Export-Import Bank of India (EXIM) bank opportunities – through Indian Lines of Credit  Exploring opportunities through Chambers of Commerce / Embassies / Defence Attaches

(4) BDL: The value of Defence exports and import during last five years is furnished below:

(₹ in crore)

2014-15 2015-16 2016-17 2017-18 2018-19 Export Nil Nil Nil Nil 66.0 Import 495 570 388 362 413

(5) GRSE: (₹ in crore) Import Import Export Financial Year Direct Import Material Services 1 2 3 4=2+3 5 FY18-19 73.06 6.98 80.04 4.55 FY17-18 122.40 9.66 132.06 3.89 FY16-17 62.04 12.25 74.29 0.26 FY15-16 201.11 12.08 213.19 0.02 FY14-15 223.67 13.94 237.61 134.00

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(6) GSL: GSL’s exports and import over the last five years are detailed below:

(₹ in crore) Year Export Import FY 2019-20 0.84 95.65 up to 31.12.2019 (Provisional) 2018-19 14.54 226.36 2017-18 607.20 90.82 2016-17 360.58 180.31 2015-16 191.43 387.42 2014-15 78.12 234.94

(7) HSL: HSL has not carried out any defence exports till date

Name of 2014-15 2015-16 2016-17 2017-18 2018-19 DPSU HSL Nil Nil Nil Nil Nil

Import consumption of HSL during last 5 years

Value of imported materials consumed Year during the year (₹ crore)

2014-15 99.52 2015-16 159.63 2016-17 65.18 2017-18 72.84 2018-19 92.04

(8) MDL: Export: Nil during the last five years.

Import: (Value in ₹ crore) Year Direct Import Value 2014-15 1492 2015-16 1966 2016-17 1726 2017-18 1733

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2018-19 1554

(9) MIDHANI: Export and Import data of last five years is as below (All values in ₹ crore)

Year 2014- 2015- 2016- 2017-18 2018-19 2019-20 15 16 17 (expected)

Export NIL NIL Nil 0.15 8.05 20 Value

In FY 19-20, the following steps have been taken by MIDHANI to improve exports:

 National Aerospace and Defence Contractors Accreditation Programme (NADCAP) certification is under process to target global aerospace market

 MIDHANI registered as a Vendor in EGYPT Defense Production Unit - HELWAN ENGINEERING INDUSTRIES COMPANY.

 UNIPOL has approved MIDHANI as a Global Supplier for Turbo Charger Application used as one of the important components in automobile industry

Year 2014-15 2015-16 2016-17 2017-18 2018-19

Import as 20.6 24.6 18.4 16.11 37.08 percent of VoP (%)

**Special steels, super alloy, titanium alloy and other product manufactured by MIDHANI are heavily dependent on input material like Nickel, Cobalt, Molybdenum, Chromium etc. which are not available in India mainly because of unavailability of relevant natural resources and are required to be imported.”

Infrastructure in DPSUs

6.14 When asked whether each of the Defence PSU has requisite infrastructure for manufacturing and processing state-of-the art products, the Ministry of Defence submitted as under:

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“(1) HAL: HAL has the requisite infrastructure for manufacturing and producing state-of-the-art products including 4+ generation fighter aircraft and with enhancement of some 5th generation specific technologies and facilities, the same can also be produced in HAL.

(2) BEL: BEL recognizes the need for continuous modernization and upgradation of its facilities in order to have state-of-the-art set ups for being able to offer the best in class products/systems to the Defence Services. BEL has the requisite infrastructure in place on par with global standards. BEL has been consistently investing in infrastructure development and modernization of facilities which is very essential for successful indigenization efforts as well as to be in tune with the changing needs of the technology/products.

(3) BEML: BEML Limited has 4 Manufacturing Complexes with requisite infrastructure to produce state-of-the-art Defence, Mining and Construction and Rail and Metro Products.

(4) BDL: BDL is having the infrastructure for manufacturing State-of –the Art products. Some of the Key Technology Upgradation projects taken up for implementation are:

 Static Test facility at Ibrahimpatnam for Surface-to-Air Missile (SAM) projects.  Robotic welding for Rocket Motor and KOE (Knock out Engine) of Konkurs-M ATGM.  Automatic loading and progression of jobs in Electroplating shop.  Vacuum Furnace for heat treatment of critical components  Tooled up Computer Numerical Control (CNC) Machining centre for Rocket Motor and KOE  CNC Pipe Bending Machine, 4-Axis CNC Machining Center.  Injection moulding machine  Explosive Storage and Magazine Building.  Additional space for storage of Ground Systems Equipment.  Introduction of Robotic welding for Akash components.  Introduction of latest 5-Axis CNC matching centre of intricate and High precision components, 6-Axis CNC machine, CNC Flow forming Machine.  Static Test facility set-up for testing of propulsion unit.  Additional Final Testing Facility (Check-Out) of Akash missiles.

(5) GRSE: GRSE successfully build an array of world-class platforms including Frigates, Missile Corvettes, Survey Vessels, Marine Acoustic Research Ship, Anti-Submarine Warfare Corvettes, Landing Ship Tanks (Large), Fleet Tanker, Water-Jet Fast Attack Crafts, Inshore Patrol

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Vessel and the Landing Craft Utility, Hovercrafts and also the First Export Warship, an Offshore Patrol Vessel to Mauritius. So far GRSE has constructed and delivered 103 such warships and amphibious ships of strategic importance. All these Warships are armed with high-tech equipment. The company in the past has also designed, constructed and supplied 680 other vessels and Crafts like Bulk Carriers, Passenger Ferries, Tugs, Towing Vessels, Seaward Defence Boats, Fast Interceptor Boats, Dredgers, Fishing Trawlers, Motor cutter, RO-RO Ferries etc.

(6) GSL: GSL has got requisite infrastructure for manufacturing ships in its product range. GSL has undertaken a planned modernization programme and augmenting its infrastructure for indigenous construction of Mine Counter Measure Vessels (MCMVs) for the Indian Navy. On completion of Infrastructure Augmentation Plan for MCMV, GSL will have indigenous capacity to build high technology MCMVs using composite material first time in the country. In addition, this will enhance the shipbuilding capacity of the yard for steel ship construction with concurrent construction of 14 Steel ships of size up to 130 M length and 6000 T displacement.

GSL has a well-established Research and Development set-up to bring out state-of-the-art products. GSL has been recognized as in- house R&D unit by the Government of India, Ministry of Science and Technology, Department of Scientific and Industrial Research.

(7) HSL: Prestigious project of national importance VC 11184 is presently being constructed by the yard to meet the requirements of the GoI. The Project has been a gateway for understanding the niche processes and advanced technology associated with modern and complex Naval vessels. This has induced the virtual 3D shipbuilding methodology nucleating from the design and through the engineering bill of materials to the advanced production techniques involving CAD/CAM tools, laser assignments, welding and advanced outfittings. Integrated construction, modularity – approach, working on state-of-the-art equipment and systems like Radars, Weapons and Sensors etc has added a new dimension to yard’s capability. The knowledge unveiled in the design, production, integration and management of this first of class special vessel would enable HSL to join the select group of yards. The yard’s infrastructure augmentation and skill development have unequivocally transformed the yard to a mature and modern ship design – building facility to handle any complex Naval vessel.

(8) MDL: Yes, MDL has requisite infrastructure for the manufacturing and producing state-of-art products viz. Warships and submarines. In fact,

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many of our infrastructure facilities are idling, awaiting fresh orders. Submarine division facilities have started idling since 2012 and will be fully idle after the delivery of last submarine in 2022.

(9) MIDHANI: Yes. MIDHANI has adequate facilities like Melting, forging, rolling, heat treatment and testing to manufacture Titanium alloy, Super alloy and special steel for various strategic applications.”

Long term perspective planning

6.15 The Committee desired to know about the long term perspective planning for the DPSUs so as to make them financially viable and their products world class. In this regard, the Ministry submitted as under: “(1) HAL: Perspective Plan, outlining the long term objectives, envisaged product portfolio, financial projections and projections for other functional areas of the company, factoring in the Technology Perspective Capability Roadmap (TPCR) of the customers and export target road map of the company is drawn up to guide the operations of the Company.

A major thrust has been given to Research and Technology Development which are of strategic importance to HAL in its endeavour to become a significant global player in the aerospace industry. Initiatives like new product development, establishment of Chairs with premier institutions like IISc, IITs(six chairs have been established), creation of R & D corpus, patenting innovation etc. would ensure sustained growth and development of world class products meeting the ever increasing expectations of the customers like high performance, quality, maintainability and reliability requirements.

(2) BEL: BEL has been preparing long term Strategic Growth Plans aligning with Perspective Plans (like TPCR) of Indian Defence forces / DRDO labs. BEL operates on 3 year R&D Plan and Technology Roadmaps have been drawn aligning to TPCR. BEL also has a 5 year Roll-on-Plan which is reviewed on a quarterly basis for various business performances, financial and other important operational parameters. BEL is financially viable and the products supplied to customer are comparable with international manufacturers. BEL is a continuously profit making DPSU and BEL strives that the products manufactured by BEL are world class.

(3) BEML: Defence business has its R&D plans and discussions are on with the collaborator keeping in view the Defence Acquisition Plan of Indian Army.

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The Mining and Construction business group operates in a stiff competitive environment, facing competition from MNCs and orders are procured from customers through a wide network of marketing offices spread across the Country. BEML has also been working on export market to scale higher volumes. Further, BEML has been continuously developing and introducing new products to the market in line with the requirement of the customer matching to the competition in vogue. The Company has launched “Make In India” Products 150T and 190T Dump Trucks and 180T Electrical Excavator successfully. These biggest electric drive dump trucks were designed and manufactured for the first time in India and are major import substitution products for the Mining sector. After successful trials, Company has received orders for 5 numbers of 180T Electrical Excavators. Further orders are in the pipeline for 150T and 190T high end dumpers. In Metro segment future market outlook is promising considering governments plan to implement Mass Rapid Transit in all cities having a population above 1 Million. Further, having supplied more than 1500 cars and having established world class infrastructure required for manufacturing Metro coaches, BEML is fully geared up for addressing the metro coach requirement of all the upcoming cities in India. BEML has already augmented the capacity for manufacturing of Metro cars and is capable of manufacturing 30 metro cars per month from the earlier level of 18 cars per month. 87 percent of business was through orders obtained through global competition with MNCs viz. Caterpillar, Komatsu, Alstom, Bombardier, CRRC, etc. (4) BDL: The long term perspective plan is prepared keeping in view the various requirements of Indian Armed Forces and for planning production over next 5 to 10 years. Bench marking initiatives are undertaken and Key Performance Indicators are identified. The products manufactured are of world class in nature. (5) GRSE: GRSE has Board Approved Corporate Plan (FY 2016-17 to 2023-24) with regard to long term perspective planning for business growth, financial viability and supplying products of international standards. The prominent changes with respect to order book position, fresh leads emerging in the domestic as well as overseas market, HR strategies, production technology, infrastructure etc., and the fast changing scenario in the country’s Defence Production has opened up fresh challenges and opportunities for the organisation. All these factors necessitate exploring new business strategies through a comprehensive Corporate Plan. The formulation of a revised Corporate Plan for the period FY 2020-21 to FY 2024-25 is underway to envisage future

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growth which is expected to be approved by the Board of Directors of the Company by end of FY 2019-20.

(6) GSL: GSL has drawn up long term Perspective Plan to encourage ‘Make in India’ projects and is working as per the plan. Shipyard has plans to make import substitute products like Mine Counter Measure Vessels first time in the country. Under ‘Make in India’ initiative, Shipyard has signed contract on 25 Jan 2019 for construction of two 1135.6 Missile Frigates indigenously under Transfer of Technology (ToT) from Russian side. Shipyard is gearing up to undertake these state-of-the-art projects to equip the Indian Navy with high technology ships. Ship Repair and General Engineering activities are being aggressively undertaken to increase the turnover. GSL is putting concerted efforts to secure the export orders with the assistance from MoD/MEA.

(7) HSL: The company is striving hard to continuously innovate and improve upon its performance and reach its vision of being internationally competitive Shipyard for building and repairs of ships and submarines within the budgeted cost and fulfilling the requirements of quality that is expected by its customers. HSL has set up the following objectives for the next five years to achieve its vision: (a) To complete refit of INS Sindhuvir by 31 January, 2020 meeting all quality standards (i.e. 08 days ahead of contractual delivery date). (b) Keel laying of 4 nos 50T BP Tugs by November 2019. (c) Keel laying of 2 nos DSVs by December 2019. (d) To continue to improve the performance of the company and to become a positive net worth company by 31 March, 2020. (e) Achieve Mini Ratna status in 2020. (f) To achieve the ‘Excellent’ MoU rating in the year 2019-20 and try to maintain the same in the succeeding years. (g) Submission of bids for 08 international tenders and secure at least 02 contracts out of them by 31 July, 2022. (h) Establish paperless office operations by 31 March, 2020. (i) Complete the ongoing renovation and beautification of the yard and HSL Colony premises, including clearance of all accumulated scrap, removal of shabby sheds, demolition of abandoned buildings etc. by 31 March, 2020.

(j) Rationalize the manning plan and the employee strength so as to plan and initiate induction of officers, staff and workmen of

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appropriate qualifications at different levels as necessary by 31 December, 2019.

(k) To secure the much needed high value orders for construction FSS (5 Nos.), SOV (2 Nos.), MRLC of INS Sindhughosh Submarine and sign the contracts as soon as possible.

(l) Plan and undertake necessary technological upgradation of infrastructure and facilities to enable expeditious construction of FSS by 31 March, 2020.

(m) Put in place a robust computerized system for accounting of all movable assets including computers, office equipment and furniture by 31 December, 2019.

(n) Set up Centers of Excellence in Design of Tugs, IPVs and OPVs; MRLC of EKM class submarines and Integration of propulsion systems, weapons and sensors.

(o) To implement SAP with Product Lifecycle Management (PLM) by March, 2020 in order to have a seamless flow of information, automated transaction and integration of design software and thereby to improve organizational effectiveness and efficiency.

(p) To ensure optimum utilization of material, financial, and human resources through cost reduction measures and lean shipbuilding philosophy that eliminate wastage.

(q) To incorporate the global best practices in all key activities of the shipyard including design and engineering, production, planning, procurement, marketing, human resource development and customer relationship management.

(r) To achieve 100 percent reduction in wasteful expenditure in order to minimize cost and maximize output.

(8) MDL:

a) MDL has drawn up long term perspective plan which gives guidance for the robust growth and sustaining financial viability for the long term.

b) Modernization facilities in MDL have enhanced the facilities for integrated construction resulting in considerable reduction in build period of ships.

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c) Make in India would be the new thrust area towards indigenization of imported items and towards this MDL has drawn up an indigenization plan to increase the indigenous content.

d) To sharpen competitive edge, improve efficiency and cut costs, MDL will benchmark its key processes with best organization in the private sector globally.

e) Export identification and equipping for export markets for MDL products and service.

f) Imparting training and education to the employees to keep them updated with the latest technologies, methods, techniques and processes.

g) Outsourcing of the activities to reduce overhead cost and remain competitive in the market.

h) Implementation of Government initiatives such as Make in India, Startup India, Digital India, Skill India, CSR etc. shall be the prime focus areas in MDL.

i) Maximizing the MSME outreach for accelerating growth, promoting equitable development and expansion of entrepreneurial base through business innovations.

(9) MIDHANI:To remain competitive and sustain in this challenging business environment, MIDHANI has taken several measures of cost reduction i.e. Yield improvement and Lean Management for resource efficiency.

Following step has been initiated by MIDHANI for cost reduction measures:

a) Four new reheating furnaces in Forge Shop were installed to reduce the energy consumption resulting in savings of about ₹ 180 lakh. b) Entered into Open Access agreement with Telangana State Southern Power Distribution Company Limited (TSSPDCL) and Transmission Corporation of Telangana Limited (TSTRANSCO) to avail 4MW solar power plant generated energy. About 10-12 percent of MIDHANI’ annual power requirement will be met through the facility resulting in savings of about ₹ 4-5 crore/annum. c) Dynamic reactive power compensation panels (01set) for 6000T Forge Press load center were installed resulting in about 30 percent savings in 6000T Forge Press energy cost

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d) High energy consuming equipment like 20T Arc Furnace is being operated in off-peak hours (22:00 hrs – 06.00 hrs) resulting in savings of about ₹ 20,000/melt e) By using insulating hot top in Vacuum Induction Melting furnace, around 3 percent yield has been improved in melting stage

Also, MIDHANI is working on areas of Make II, Intellectual Property Rights and Artificial Intelligence as given below.

a) Implementation of ‘Make-II’ under Indigenization to reduce the cost of procurement. b) Intellectual Property Rights (IPR) to ensure embedded competence. c) Artificial Intelligence (AI) to ensure better predictability and for proactive decision making.”

Reduction in dependence on imports

6.16 During deliberations of on Demands for Grants 2020-21, the Committee enquired about the steps taken by the Ministry of Defence to minimize the dependence on imports and orient DPSUs to provide maximum supplies to our Defence Forces. In response, the Secretary (Defence Production) submitted as under:

“….in 2016, the Defence Procurement Procedure itself was modified. Now, we are giving preference to ‘Buy Indian’. Now, what is Buy Indian? It is Indian designing, developing and manufacturing. In every procurement that our armed forces do, first they go through the process whether the in-house capability exists in the country and we should encourage that. That is Buy Indian.

Then there is also ‘Make Too’. If we are importing something, even some components, we see whether we can make those components within the country or not.

So, we are making all efforts. As you can see, all our defence PSUs are continuously going in the direction of indigenisation, import substitution, patent filing etc. Now, why is patent filing? It is because these are key technologies and no country will share those technologies with us. We have to develop those technologies We are having a very strong eco-system of our own R&D within the company and collaboration with DRDO and other such institutions.”

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6.17 During oral devidence of the representatives of the MoD, the Committee enquired about plan of commercial use of alloys by MIDHANI. The Chairman and MD, MIDHANI responded as under:

“Sir, these alloys can be utilised for other sectors like oil and gas has started showing interest in these type of alloys because their life cycle increases. We have developed spring rod also for Railways for their spring coaches. So, we are working on it, and we are trying to enter slowly into these sectors after increasing the capacity of our plants.”

Level playing field for players participating in Defence production

6.18 The Committee, during their deliberations on DFG 2020-21, desired to know whether the Ministry of Defence favours the DPSUs over other private indigenous players participating in defence production. In this regard, the Secretary (Defence Production) clarified as under:

“आपने कॉ ऑफ इंटरे का एक मुा उठाया है। सर, एक ॉसपेव ान बनता है और हमारी िडफ स पीएसयूज को आज िदन कोिशश यह की जाती है िक कोई भी नॉिमनेशन बेिसस पर नहीं दी जाए। यानी उनको कॉीटेटीव एनवायरट एटमोसफेयर की तरफ पुश िकया जाए। अब हमारे िडफ स पीएसयूज कॉपटशन म उतर रहे ह और कॉीटेिटव िबिडंग म भाग लेते ह, इसकी वजह से उनकी ॅािफट भी साल दर साल बढ़ती जा रही है और उनके अंदर भी एक ािलटी और एिफिशएंट फं िनंग की भावना उ हो रही है। जैसा िक सर ने अभी बताया है िक दुिनया के टॉप 100 म िकतने पीएसयूज ह, अगर उनको यह बात पता लगे, तो शायद अंदर से एक भावना मजबूत होगी िक हम टॉप 100 म नीचे ों रह, हम ऊपर की तरफ ों न जाएं। उनम गौरव और गव की भावना आएगी। म यह मानता ं िक हमारे र के अंदर िमिन ी कोिशश कर रही है, within the system itself िक िडफ स पीएसयू कोई एट ा फेवरेबल ट ीटमट नहीं द, उनको कॉीटेिटव बनाएं और िडफ स हमारे देश की सुरा का िवषय है। इसिलए इसे दूसरी िसिविलयन िमिन ी म दे देने से, बाई लॉज बैलस ऑफ किनएंस िडफ स िमिन ी के ही फेवर म रहती है, ऐसा मेरा मानना है।“

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CHAPTER VII CANTEEN STORES DEPARTMENT (CSD)

Introduction

The Committee have been informed that the Canteen Stores Department, a Government of India Undertaking under the Ministry of Defence, is committed to welfare of troops of the Army, Navy and Air Force and their families, through easy access to quality products of daily use at less than market prices.

Budgetary provisions 7.2 The Committee have learnt that as against the projection of ₹ 22,240.10 crore, BE allocation to CSD for 2020-21 is ₹ 20,100.38 crore.

7.3 The General Manager, CSD in his oral deposition before the Committee submitted that the entire profit margin earned by CSD goes to the Consolidated Fund of India.

7.4 The Secretary (Defence Finance) also deposed in this regard: “We provide budget to them at the beginning of the year which is for procurement. They pay the vendors from whoever they are buying. Whatever money they get from sale goes into the Consolidated Fund of India.”

7.5 To a specific query of the Committee regarding dividend paid to the Government by CSD, the MoD has submitted that: “50 percent of the CSD Trade Surplus (CTS) generated by the Canteen Stores Department goes to Consolidated Fund of India (CFI). The details of CTS over the last 5 years are as under:

(₹ in crore)

Year Canteen Trade Surplus (CTS) (50% of total profit) 2014-15 88.97 2015-16 117.84 2016-17 115.16 2017-18 327.03* 2018-19 186.10* * Audit certificate yet to be received.

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Online presence of CSD

7.6 In their Power Point presentation before the Committee, the Ministry enumerated following efforts for commencing online services of CSD:

 Process underway with regard to automation of CSD.

 Preparation of RFP and Scope of Work likely to be Completed by mid March 2020.

 Developmental Phase (linking of Two major URCs with Depots at Mumbai and Delhi by end September, 2020.

 Feasibility of E-Commerce/Online Services will be looked into Post Automation.

7.7 The General Manager, CSD also elaborated on this aspect of online shopping in his evidence:-

“Sir, the online shopping will be having a mix of both home delivery as well as delivery to depots. The reason I am telling you is that home delivery may not be feasible in the areas of Jammu and Kashmir, 3 Corps, 4 Corps, 15 Corps, 16 Corps, but for veterans who are there in Tohana, it is very much feasible. In fact, the Samsung, HP etc. have come to me and told me that they will be able to supply TVs and all the electronic items to the houses the moment automation happens. It is very much feasible. There are certain restrictions in the Cantonment Area and you are aware of that. But nevertheless, 60 per cent clientele is still of the veterans and they will be satisfied the moment online automation happens and I assure you Sir it will happen by September or October.”

Manpower strength

7.8 During their deliberations on DFG 2020-21 the Committee raised the issue of manpower shortage in CSD. In this regard, the General Manager, CSD replied as under:

“Sir, right now what we do is, courtesy the efforts by the Ministry of Defence and the directions, we have got the power to hire Data Entry Operators and we have hired them through a proper outsourcing procedure. But it is not a fool-proof system because we would like to have permanency in the arena of invoicing and accounting in our depots and at my Financial Department.

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Otherwise, mazdoor and watchmen are acceptable. But these people will have to come in a big manner.

I also want to tell you that they do come, but there is a cross ventilation in the sense that they are leaving the arena and going back because of cadre review. A lot of people have come from the State Service Commission, joined for about two years and have left now. As per the DoPT rule, they can leave, but when they have to come, they have to come through a procedure and it takes its own time.”

7.9 When asked whether Ex-Army personnel are re-employed in CSD, the General Manager, CSD responded as under:

“Ex-Army personnel are there. There are Ex-Subedar Majors, there are Ex- Havaldars, they are there, they have to pass that SSC Test and Interview and they do come. It is done by the SSC; we have got a partial control over that. But the effort is on to get more people. These days, when I find the criticality of these people, to an extent it is becoming virtually impossible. I have even used the GM Benevolent Fund to have the Financial and Account Department to have about 30 boys and girls who are Commerce qualified persons so that at least the bills are given on time. We have done that. But we have got about 80 to 90 Data Entry Operators in the Head Office and about 5 to 10 people of similar fashion in my depots to stem the rot temporarily. But the idea is to get them at the earliest. That will be done by the SSC and I am sure it will happen soon. But once the automation happens, we may not require that many people because the number of invoicing and transactions will become online and we will have a real time online visibility where it will become very easy. Probably, it will also undergo a structural review in terms of LDCs and UDCs as and when the automation happens and probably it will happen about by about September or October this year.” Challenges and constraints

7.10 In their Power Point Presentation before the Committee, the MoD submitted that following challenges and constraints were being faced by the CSD:  Additional Budget of around ₹ 2000 crore to meet the contractual obligation of current F.Y.

 Automation of CSD to ensure full spectrum visibility in our supply chain management and accounting/payments

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 Modernisation of existing Warehouses (₹ 138 crore projected to Ministry of Defence.

 Making up of critical shortfall of CSD Manpower: Especially in the Trades of Accountant and LDC/UDC wherein existing shortfall is of approx 1000 personnel.

Qualitative requirements for opening Unit run Canteens in an area

7.11 The Committee desired to be apprised of the Qualitative requirements for opening Unit run Canteens in an area. In this regard, the Quarter Master General of the Indian Army replied as under:

“About the QR for opening canteens, there are combatants, that is, serving personnel whether Army, Navy, Air Force, Assam Rifles, and सैिनक टुकड़ी, िजसकी थ 100 से ादा या िपयोरली पांच हजार ए-सिवसमैन ह; this is just a guideline. We are not strictly following it. Some districts may be at distant place. There may not be canteens, but still we are managing it by sending mobile canteens or opening canteens.”

Use of technology

7.12 The Committee also enquired about the use of technology for Central Warehousing by CSD. The General Manager, CSD, responded as under:

“Sir, it will be done for the Depots as well as URCs post automation. It is very easy for the suppliers to even go to the high end canteens and in the veteran areas. They will not be able to go inside the cantonment. But 50 per cent people will get their televisions at house, like it happens in Amazon and Flipkart.”

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CHAPTER VIII

WELFARE OF EX-SERVICEMEN

The Committee take note of the fact that in view of the ever expanding population of Ex-Servicemen (ESM), there were persistent demands from Service Headquarters and various associations for a separate department to look after the welfare, resettlement and rehabilitation of ESM, war widows and their dependents. In 1986, a decision was taken to create an independent resettlement division in the Department of Defence. Accordingly, a new Department of Ex-servicemen Welfare (ESW) was set up in September, 2004 within the Ministry of Defence. This Department formulates various policies and programmes for the welfare and resettlement of ESM in the Country.

8.2 This Department has two Divisions viz., the resettlement Division and the Pension Division and has 3 attached offices namely (i) Secretariat of Kendriya Sainik Board (KSB), (ii) Directorate General of Resettlement (DGR) and (iii)Ex-servicemen Contributory Health Scheme (ECHS) Organisation.

8.3 Welfare of the Ex-Servicemen and their dependents is the joint responsibility of the Centre and the States / UTs. Like the Kendriya Sainik Board at the Centre, the Rajya / Zila Sainik Boards are responsible for policy formulation and implementation of resettlement and welfare schemes for Ex-Servicemen, widows and their dependents residing in their respective States / UTs / Districts. To assist the Central Government in this regard, there are 33 Rajya Sainik Boards and 403 Zila Sainik Boards in the country.

Role of Directorate General of Resettlement (DGR)

8.4 The Committee have learnt that the role of DGR is to empower retiring/ retired service personnel with additional skills and assist them in choosing a second career. This is achieved through the following modalities:-

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(a) Seeking suitable employment for Ex-Servicemen (ESM) as also upgrading their skills by imparting training, to take on new jobs.

(b) Provide opportunities:

(i) Government / Quasi Government / Public Sector Organisation.

(ii) Corporate Sector.

(d) Assistance in entrepreneurial ventures.

(e) Act as the interface between retired service personnel, dependents and the outside environment for resettlement / second career.

Budget utilisation

8.5 The Ministry of Defence submitted the following details regards budget for 2018-19, 2019-20 and 2020-21 in respect of the Department of Ex-Servicemen Welfare:

(₹ in crore)

BUDGET UTILISATION 2018-19 2019-20 2020-21 BE RE ACTUA BE RE ACTUA BE L L (Exp upto 31.1.20)

C 6892.00 O, (projected) 3223.76 3198.02 3223.55 3281.26 4872.29 2869.23 EC 3301.98 HS (Approved)

D 21.00 G 14.00 14.04 13.94 14.00 15.50 12.21 (projected) R

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KS B 266.39 35.91 62.87 61.59 53.27 53.27 48.19 Se (projected) ctt

122193.00 Pe 108853. 106775.1 101774. 112079. 117810. 112806. (Projected) nsi 30 4 61 57 44 19 133825.00 on (Approved)

8.6 During the oral evidence, the Secretary, Kendriya Sainik Board invited attention of the Committee to the Budget allocation to the KSB:

“म सिमित का ान एकऔर मुे की तरफ आकिषत करना चाहता ं, के ीय सैिनक बोड का एलॉटमट है। 2014-15 म 135 करोड़ पये था, 2015-16 म 188 करोड़ पये था। िपछले चार सालों से 60 करोड़ के आस पास घुम रहा है, आपको मालूम है जैसािक जटेशन म बताया गया। राों को 75 से 50 ितशत शेयर उनकी तनाह के िलए है, हम इसी फंड से देते ह, अगर इस फंड म िपछले चार सालों से कमी आएगी तो उनके रा सैिनक बोड, िजला सैिनक बोड म जो कायरत लोग ह, उनकी तनाह, ऑिफस खच, सैिनक रे हाऊस का पैसा देना, इन सब म बार-बार कमी होती जाएगी, इस मद म 133 करोड़ अगले वष भुगतान के िलए रहेगा। इसके साथ ही इसी फंड तीस करोड़ पये हर वष आड फोसज ैगडे को िमलता है जो िक बत कम है। अलग-अलग वेलफेयर ी चलाने के िलए होती है, वहां भी साढ़े तीन सौ करोड़ पये की कमी रह गई है। हमारे पास जो अीकेशन िमल गए ह, उनको पेमट करना बाकी है। 2014-15 म इसी सिमित ारा आदेश देने पर 82 करोड़ पये ेशली आड फोसज ैगडे फंड के िलए एलॉट िकया गया था, बैकलॉग अरयर यर करने के िलए िदया गया था। मेरा अनुरोध है िक इस पर िवचार कर।“ 8.7 The Secretary, Ex-Servicemen Welfare also deposed as under:

“सर, 40 परसट ेट गवनमट सेआता है, सट ली िमिन ी एलोकेट नहीं करते ह। आम बजट से जाता है।”

8.8 During his deposition before the Committee the Secretary, KSB also brought up that the meeting of the Rajya Sainik Boards (RSBs) in some of the States in South Zone has not been held in the last 10 years.

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Avenues of resettlement of retired officers and Personnel Below Officers Rank (PBOR)

8.9 For the perusal of the Committee, the Ministry of Defence has furnished following information regarding avenues of resettlement available to retired Officers and Personnel Below Officers Rank (PBOR):

“Resettlement Opportunities

1. Job Opportunities For ESM in Central Government. Personnel of the Armed Forces viz. Army, Navy and Air Force are the only Government employees who retire at relatively younger ages to keep a youthful profile due to the arduous nature of their duties in hazardous and inhospitable terrain. Almost all Ex-Servicemen, whose retirement ages, depending on rank vary from 35 to 54 require help and assistance for resettlement. They require a second career as they are young and active and their responsibilities and obligations are at the peak when they are retired. Having given their best part of their life for the safety and security of the motherland it becomes a national obligation to provide necessary facilities for their resettlement. Keeping these in mind, the Central/State Governments have provided reservation in jobs for Ex-Servicemen.

2. As per DoPT Notification No. 36034/1/ 2006-Estt. (Res) dated 04 October, 2012 amending DoPT Ex-Servicemen (Re-employment in Central Civil Services and Posts) Rules, 1979, 10 percent of vacancies in the posts up the level of the Assistant Commandant in all Para-Military Forces, 10 percent of the vacancies in Group ‘C’ posts and 20 percent of the vacancies in Group ‘D’ posts, including permanent vacancies filled initially on a temporary basis and temporary vacancies which are likely to be made permanent or are likely to continue for three months and more, to be filled by Direct recruitment in any year shall be reserved for being filled by ESM.

3. As per Government of India, Ministry of Finance OM No. 6 /55/ 79- BPE (GM I) dated 13 March, 1980, 14.5 percent vacancies in Group C posts and 24.5 percent vacancies in Group D posts are reserved for ESM in Central Public Sector Undertakings (CPSUs). This includes 4.5 percent for disabled Ex-Servicemen and dependants of those killed in action.

4. As per Government of India, Ministry of Finance (Banking Division) letter No. F 2/11/79/ SCT (B) dated 09 June, 1980 and letter No. F 201/15/87- SCT(B) dated 11 May 1988, 14.5 percent vacancies in Group C posts and 24.5 percent vacancies in Group D posts are reserved for ESM in action in Public Sector Banks / Financial Institutions. This includes 4.5 percent for Disabled Ex-Servicemen and dependants of servicemen killed in action.

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5. Likewise, the State Governments have also reserved State Government Jobs for Ex-Servicemen. The percentage and Groups in which these job have been reserved for Ex-Servicemen by the State Governments varies from State to State.

Placement assistance through DGR

6. Directorate General Resettlement (DGR) sponsors Ex-Servicemen (Officers) to various Government organizations, Public Sector Undertakings, Corporate Houses, Private Sector, Central Para Military Forces etc. based on their requisition for re-employment of ESM. The DGR sponsored ESM are re- employed by the requisitioning agencies after due process of selection by them. For registering Ex Servicemen with DGR there is a SOP outlining the registration process including the documents required for registration. Veteran Officers are registered with DGR and the JCOs/ORs are required to register with their Zila Sainik Board (ZSB). Various documents are required to establish the credentials of an Ex Serviceman and the list of which is printed in the application form for clarity. Interaction with various stake holders is carried out on a regular and routine basis to generate and assist the Ex Servicemen in gainful resettlement post retirement. In the recent past, Officers have been employed with Armed Forces Tribunal, Enforcement Directorate, Central Bureau of Investigation, Government PSUs, Banks (including Private banks and Financial Institutions), LIC, Legal and Medical Vacancies of various State and Central undertakings, and vacancies in corporate sectors in a plethora of sectors, most prominently being in middle and senior level opportunities of HR, Administration and Logistics etc.

DGR Sponsored Security Scheme

7. The DGR empanels / sponsors ESM run Private Security Agencies and State ESM Corporations for providing security guards to various CPSUs, Corporate Houses, Private sector Undertakings etc. The scheme offers self- employment opportunities to retired officers and adequate employment opportunity to retired JCO/OR in a field where they have sufficient expertise. Presently, there are approximately 1000 operational Security Agencies running 48000 guards Pan India. Status upgraded to skilled and highly skilled from semi skilled and skilled labour respectively vide gazette notification dated 19 January, 2017. Accordingly wages of guards pan India has been substantially increased by approximately 50 percent to 60 percent approximately. As the present scale of the unarmed skilled worker has been increased from ₹ 414.00/- to 637.00/- (Rupees Four Hundred Fourteen to Six Hundred Thirty Seven) per day in Class ‘A’ Areas.

8. This is the largest Employment Scheme of DGR and is looked after by DGR and the Directorate Resettlement Zones (DRZs). Wherein DRZ(North) is

141 responsible for allocation of Security Guards in the State of Jammu and Kashmir, DRZ(West) is responsible in the State of Punjab, Haryana and Himachal Pradesh, DRZ(Central) is responsible in the State of Uttar Pradesh and Madhya Pradesh, DRZ(South) is responsible in the State of Gujrat and Maharashtra and DRZ(East) is responsible in the State of West Bengal. Other States are looked after from this HQ. Guards are allocated based on requisition received from PSUs. The scheme is governed as per the GoI, Ministry of Defence, Department of ESW and a Board of Officers is held prior to allotting Security Guards.

9. ESM Coal Loading and Transportation Scheme. The scheme to raise Ex-Servicemen (ESM) Coal Transportation Companies was formulated between the erstwhile Ministry of Energy and Ministry of Defence in 1979 with the aim of having union free captive transport organisations in coal subsidiaries and providing an opportunity to ex-servicemen for resettlement. The Scheme is administered on the basis of MoU between the Coal India Ltd (CIL) and DGR. On receipt of requisition from the Coal Subsidiaries of CIL i.e. South Eastern Coalfields Limited, Chhattisgarh, Western Coalfields Limited, Nagpur, Mahanadi Coalfields Limited, Odisha, the offer is given to the five senior most eligible empanelled ESM(O) for this scheme, willing to undertake the work, to carry out a feasibility study of the proposed area offered. If the study is found profitable the ESM are advised to register their company under the Company Act of 1956. This ESM Company has to start with capital of ₹ 60 to 80 lakh which is pooled in by all the directors equally. The Company is required to undertake coal loading and transportation at the site offered. The job is undertaken with the help of heavy machinery like pay loaders and tipper trucks. The payloaders are purchased by the company whereas the tipper trucks are attached to this company by Ex-Servicemen waiting in a separate waiting list maintained in DGR. The ESM company starts its operations with one payloader and ten tipper trucks and can expand upto four payloader and forty tipper trucks. The company is sponsored by DGR for a period of five years which can be extended by four years, if the performance of the ESM Company is found satisfactory. In order to ensure adherence to MoU and Guidelines for running this scheme, a number of reports and returns are sought from the company, also, periodic site visits are carried out by DGR/its regional offices. As on date, 46 ESM coal companies are running in subsidiaries.

10. Management of Company Owned Company Operated Retail Outlets. As per the policy of Ministry of Petroleum and Natural Gas (MoP&NG), Company Owned Company Operated (COCO) Retail Outlets are made available for Management by Retired Defence officers and JCOs on contractual basis for a maximum period of three years. The scheme is operational Pan India. ESM Officers and JCOs should not be above 60 years of age at the time of sponsorship and should be willing to provide bank guarantee as per company’s requirement. Officers are sponsored by the office

142 of DGR and JCOs through their respective Rajya Sainik Boards (RSBs). Oil Company pays ₹ 30,000/- per month as fixed remuneration plus incentive on sale of oil product. The policy guidelines are available in the form of brochure on the website of all major Oil Companies namely Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited.

11. Management of CNG Stations by ESM(O) in NCR/Pune.Although there is no MoU on this scheme, however, DGR has a tie up with Indraprastha Gas Limited (IGL) in New Delhi and Maharashtra Natural Gas Limited (MNGL) in Pune and it provides a panel of retired defence officers for managing the services and front court operations of all the CNG Fuel stations of IGL in NCR. On receipt of requisition from IGL, desirous ESM(O)s registered in the scheme are sponsored in the ratio of 2:1. The interview and selection is carried out by IGL staff with a member of DGR. The selected ESM (O) is contracted for a period of five years on a yearly renewable contract basis. The remuneration ranges from ₹45,000 to ₹90,000 per month. This is a very sought after scheme for officers and today approximately 100 such outlets are being successfully run by ESM in Delhi, NCR. With effect from 2015, a similar scheme has been launched with MNGL in Pune (Maharashtra) and three pumps are functional as on date.

12. Allotment of Mother Dairy Milk Booths and Fruit and Vegetable (Safal) Shops in NCR. This scheme is based on an MoU between DGR and Mother Dairy wherein fully furnished shops are offered by Mother Dairy to ESM (personal below officer rank) for sale of milk and fruit, fresh vegetables. The desirous ESM are required to register for Milk / SAFAL (Fruit and Vegetable booths separately. On receipt of requisition from Mother Dairy the ESM are sponsored in the ratio of 3:1. The selected ESM are required to sign an agreement with Mother Dairy and deposit a security deposit of ₹ One lakh (refundable). They are imparted two weeks of training and allotted booths on their turn. A security deposit amount of ₹ 50,000 approximately is also required at the time of allotment of booth. The ESM earns a commission on all the products sold and the commission is revised from time to time by Mother Dairy. However an assured amount of ₹ 15000 per month through out in terms of commission is ensured by Mother Dairy for Milk booths and ₹ 23000 per month (for first six months only) for SAFAL booths. In addition to above amount for SAFAL the mother dairy also gives an amount of ₹ 5000 per month for employing a helper (first six months only). The ESM is allowed to run booths up to age of 60 years and extendable by two years for ESM who are exceptionally good. As on date, approximately 800 Mother Dairy milk booths and 380 SAFAL fresh fruit and vegetable outlets are being run by ESM.

13. Coal Tipper Attachment Scheme. This scheme is linked with the ESM Coal loading and transportation scheme. Desirous ESM who enrol for this scheme are allotted to Coal transportation companies to own and attach a

143 tipper truck. They are required to deposit seed money for buying the tipper truck. The scheme is offered for a maximum period of five years.

14. Tipper Attachment Scheme for Widows and Disabled Soldiers/ Dependents. Widows upto age of 65 and disabled soldiers having 50 percent or more disability are also allowed to enrol for this scheme. However they do not own any tipper but deposit ₹ One lakh with the ESM Coal Transportation Company. The widow / disabled soldiers are paid a monthly sum of ₹ 3,000/ per month for a period of five years. At the end of five years the principal amount is returned back.

15. Issue of DGR Eligibility Certificate for Allotment of LPG/Retail Outlet (Petrol/Diesel) Distributorship advertised by Oil Marketing Companies against 8 percent Reservation Quota. The Ministry of Petroleum and Natural Gas has 8 percent reserved quota for allotment of LPG Agency advertised under the ‘Government Person (GP)’ category. The said category includes personnel of the Para Military Forces/Central Govt /State Govt and Central /State PSU employees and Defence Personnel. The defence personnel eligible include war widows/dependents of those who died in war, war disabled/disabled on duty while serving in operational area, widows/dependents of those who died in harness due to attributable or aggravated causes to Military Service, ex- servicemen disabled in peace due to attributable or aggravated causes to Military Service and able bodied ESM. Eligible applicants can only apply when a newspaper advertisement under the above category is published by the oil companies. The office of DGR issues eligibility certificate to the above entitled ESM/Widow/Dependent which is required to be submitted in original to the oil company at the time of verification. Selection of a Distributor/ Dealer is done through draw of lots by the concerned oil company of all eligible applicants.

16. Retail Outlet Dealership (Petrol/Diesel). The Ministry of Petroleum and Natural Gas has 8 percent reserved quota for allotment of Regular/Rural Retail Outlet Dealership under ‘CC1’ category. The said category includes personnel of the Para Military Forces/Central Govt /State Govt and Central /State PSU employees and Defence Personnel. The defence personnel eligible include widows/dependents of those members of Armed Forces who died in war or in harness due to attributable or aggravated causes to Military Service, ex- servicemen who are war disabled/disabled in peace due to attributable or aggravated causes to Military Service. Eligible applicants can only apply when a newspaper advertisement under the above category is published by the oil companies. The office of DGR issues eligibility certificate to the above entitled ESM/Widow/Dependent which is required to be submitted in original at the time of interview/selection. Able bodied ex-servicemen are also eligible for the said scheme and are required to apply directly to the Oil Company with a copy of their Discharge Order or Pension Order. Selection of a Distributor/ Dealer is

144 done through draw of lots by the concerned oil company of all eligible applicants.

Note. The policy guidelines for allotment of said distributorships are available in the form of brochure on the website of all major oil companies namely Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited. Detailed guidelines have also been hosted on the DGR website www.dgrindia.com. The eligibility criteria, Application Forms and Other details of the schemes are given in www.dgrindia.com website.

17. DGR Ex-Servicemen Seminar cum Job Fairs. Based on the Memorandum of Understanding (MoU) signed between DGR and the Confederation of Indian Industry (CII) in August 2014, DGR Ex-Servicemen Job Fairs are being organized Pan India with the support of all the three Service Headquarters. This initiative has been well received by the environment and the ‘Corporate Sector’. It offers a direct interface between the Employer and the prospective candidate that includes on the spot skill test, interview and offer letter for employment in the Corporate Sector. Another MoU with Federation of Indian Chambers of Commerce and Industry (FICCI) to increase representation of ‘Corporate Sector’ in Job Fairs for increasing their employment avenues/ vacancies for ESM has been signed between DGR and FICCI on 27.1.2020. Details of DGR ESM Job Fair / Employment Seminars are as follows.

Location Date Participation Job vacs Corporate ESM (approx) Employers Jaipur Sep 2014 15 500 100 New Delhi 06-07 May 2015 83 2800 4000 Mumbai 11 Oct 2015 51 770 700 Guwahati 22 Nov 2015 12 600 100 Bengaluru 10 Jan 2016 37 1462 1500 Pune 25 Sep 2016 49 1600 824 Ambala 26 Oct 2016 32 600 350 Lucknow 22 Jan 2017 38 2485 1200 Visakhapatnam 26 Feb 2017 42 2600 1150 Ahmedabad 09 July 2017 30 650 600 Ranchi 22 Sep 2017 27 1600 750 Mumbai 25 Nov 2017 45 1100 1000 Secunderabad 20 Jan 2018 35 1552 1493

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Kochi 08 Mar 2018 32 1400 765 Chandigarh 26 Jun 2018 30 1307 525 Mumbai 24 Oct 2018 35 1095 1874 Chennai 14 Nov 2018 49 1056 6025 Nagpur 29 Nov 2018 36 567 3280 Pune 06 Dec 2018 49 1037 709 Bengaluru 28 Dec 2018 30 1286 938 Kolkata 27 Feb 2019 17 1924 3180 Goa 15 Mar 2019 23 402 368 Ahmedabad 23 Aug 2019 31 1526 559 Chandigarh 11 Oct 2019 31 1090 2570 Pune 16 Oct 2019 29 856 2779 Chennai 22 Nov 2019 42 1438 2430 Kolkata 28 Nov 2019 41 1815 1192 Total 971 35118 40961

18. Resettlement Training Training Directorate at DGR is responsible for organizing and conducting Resettlement / Skill Development Training Courses for retiring/retired personnel of Indian Armed Forces. The primary objective of conducting such courses is to prepare them for appropriate civil sector employability once they retire from active services. 19. Resettlement courses for officers are conducted generally in the field of management and JCOs/ OR and their equivalent generally undergo skill based training programmes. These courses are conducted at Central Government Institutes / State Government Institutes / Institutes run by / aligned to Regulatory Bodies or Institutes aligned to National Skill Qualification Framework (NSQF). Course fee for JCO/OR and their equivalent is 100 percent subsidized by GoI while for officers, 40 percent of the course fee is borne by the individual officer. 3 percent seats for all resettlement training courses are reserved for widows of Officers/JCO/OR and their equivalents. Details of Resettlement Courses conducted during the last five years are as follows:-

Category FY FY FY FY FY 2015-16 2016-17 2017-18 2018-19 2019-20 (Upto Dec. 2019) Officers 724 585 464 556 447

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JCOs/OR/ESM 7737 4618 7904 5911 4385 Regimental 21780 * * * * Centres Total 30241 5203 8368 6467 4832

* From the year 2016-17 onwards courses conducted at Regimental Centres are not sponsored by DGR. This has led to reduction in number of personnel undergoing DGR sponsored Training Courses.”

Employment generated by the DGR under various Schemes

8.10 The details of employment generated by the DGR under various Schemes during were submitted during examinationof DFG 2020-21 as under:

Sl Scheme 2017 2018 2019

1 Security Agencies & State ESM Corpns 458 648 1289+3 Empanelled 2 ESM sponsored in security agency 33394 35558 42289

3 ESM sponsored in Coal Companies 148 307 284

4 Widows/ disabled ESM attached in Coal Co’s 67 134 59

5 Management of CNG stations in NCR/Pune 35 40 57

6 Sponsored for COCO scheme (Petrol Pumps) 66 21 14

7 Issue of eligibility certificate for Allotment of oil 384 180 146 product agencies (Petrol Pumps/LPG)

8 Mother Dairy/ Milk Booth/ Safal Booth 365 329 354

9 Sponsored/Placement by DGR Directorate 9604 11315 9706

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10 Placement by Rajya Sainik Boards 14622 16121 16688

11 Employed with Defence Security Corps (DSC) 4133 4761 5072

New Avenues for resettlement of Ex-Servicemen

8.11 The Ministry has submitted following information regarding new proposals for opening of new avenues for the resettlement of Ex-Servicemen:

“The following proposals are being contemplated:-

1. Provision of “Technical Service” by ESM Manpower/ Agencies Sponsored By DGR: ESM as an individual is highly loyal, disciplined, cultured, responsible and youthful. During their active service, the ESM handle complex systems of Aircraft, Ships, Submarines, Guns, Tanks, Weapons systems, Heavy Vehicles and Machineries and Complex Systems in Civil Defence. The skills acquired during service are enhanced and reoriented to suit the requirements of civil industries by virtue of undergoing resettlement courses at the time of retirement facilitated by DGR. A number of Government establishments / complexes outsource the requirement of skilled manpower (temporary on contractual basis) for Operations and Maintenance of technical equipment to Civilian Agencies (unregulated). Guidelines to provide ESM manpower as ‘Maintenance and Support Staff’ on contractual basis for Operations and Maintenance of technical equipment (Heavy duty Plant, Mechanical Equipments, Vehicles and Electrical machinery) are under finalization in this Department.

2. Women Centric {(ESM (W)} Schemes/ Initiatives proposed by DGR: Government of India/ MoD has progressively sanctioned/ increased the quota of women (all ranks) in the three Services (Army, Navy and Air Force). On retirement, they will also enjoy the ESM status as authorised to Male Soldiers (All ranks on their Retirement). Retiring (All Ranks) Female soldiers {hereafter referred to as ESM (W)} would also be eligible to avail DGR sponsored welfare schemes. Apart from this, the Indian Army has recently started recruiting/ training women as a Soldier in the Corps of Military Police (CMP). Women officers serving in all three Services besides Lady Doctors (retiring from Service) would form bulk of the ESM (W). There will be ESM (W) also from CMP (Corps of Military police). Following schemes are proposed to be formulated in this regard:-

(a) Hospital Administration Scheme (HAS) for ESM (W) All Government Hospitals (Centre/ State) and Private Hospitals and Nursing Homes have a

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standing requirement of outsourcing for Hospital Administrative Services (both as Proprietors and Supervisors) in form of Nursing Doctors/ Administrative and Technical staff. ESM (W) officer will form a HAS Company/Agency that will have a composition of doctors, Nursing staff, technical and administrative staff. Further, ESM (W) registered with DGR will be eligible for following jobs (on contract) through Hospital Administration Scheme :-

(i) Doctors / Nursing Staff / Lab Assistant and medical support staff.

(ii) Proprietors for provisioning of Hospital Administrative Services.

(iii) Proprietor for Security Agency.

(iv) Supervisors for Administration work.

ESM (W) will register themselves with DGR and get empanelled for Jobs. Based on type of requisition and inter-se seniority, ESM(W) will be sponsored to the Govt / Pvt Hospitals and Nursing Homes.

(b) Office cum House Keeping and Maintenance (OHK &M) for ESM(W) There is a growing demand / requirement from Corporate Houses / Corporates and other Departments (Government and Civil) to outsource their requirement for office maintenance (including House Keeping for the guest houses/rooms). ESM (W) officer will form an OHK&M Company/ Agency that will have a composition of Vendors, Attendants and Guards etc. ESM (W) registered with DGR will be eligible for following jobs (on contract) through DGR for OHK&M Scheme:-

(i) Suppliers for office requirement (eg. Stationery related equipment/items).

(ii) Provision of ESM (W) Guards / Attendants.

(iii) Other logistics Requirements related Office and House Keeping.

ESM (W) will register themselves with DGR and get empanelled for jobs. Based on requisitions received by DGR, ESM(W) will be accordingly sponsored.” Significant Achievements 8.12 During their oral evidence before the Committee on examination of DFG 2020- 21, the MoD enumerated following significant achievements w.r.t. Ex-Servicemen Welfare:

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SIGNIFICANT ACHIEVEMENTS OF DESW IN 2018-19 . 189 Additional medical facilities empanelled. . Procurement of unavailable medicines through Authorized Local Chemist system of CGHS with suitable relaxations for ECHS. . The ECHS beneficiaries have been allowed to take treatment in AYUSH system of medicine vide letter No. 22B(06)/2017/WE/D(Res-I) dated 8.8.2018. . Orders granting Fixed Medical Allowance to ECHS beneficiaries residing in districts not covered by ECHS Polyclinic/Armed Forces Hospitals/MI Room upgraded to accommodate ESMs, issued vide DESW order No. 22(01)/2017/WE/D(Res-I) dated 1.11.2018. . ECHS beneficiaries allowed to purchase medicines not available in Polyclinics from market and claim reimbursement vide DESW Sanction No. 22D(01)/2016/WE/D(Res-I) dated 30.1.2019. . Vide Government of India, MoD letter no. 17/17/2015/WE/D(Res-I) dated 05.02.2019, order has been issued by the Deptt. of Ex-Servicemen Welfare for grant of ECHS facilities to the Assam Rifles pensioners and their dependents residing in India and Nepal. . Vide Govternment of India, MoD letter No. 17(11)/2018/WE/D(Res-1) dated 7.3.2019, after approval of CCS, order for grant of ECHS facilities to World War-II Veterans, Emergency Commissioned Officers (ECOs), Short Service Commissioned Officers (SSCOs) and pre-mature retirees has been issued. . Armed Forces Flag Day Fund: This money is used for providing financial assistance to needy ESM/dependents. There has been a record high Fund Collection during 2018-19 of ₹ 44.28 crore. In 2017-18 it was ₹ 18.61 crore.

SIGNIFICANT ACHIEVEMENTS OF DESW IN 2019-20

. Orders issued on 8.7.2019 for grant of Dual Family Pension for re-employed Military Service. Special Family Pension (SFP)/Liberalized Family Pension (LFP), if any, would be admissible in terms of MoD letter No. 1(2)/97/D(Pen-C) dated 31.1.2001 on death of a pensioner who was re-employed in military service and if his death is attributable to military service, in addition to Ordinary Family Pension (OFP) in respect of previous military/civil service subject to other conditions. . Instructions for according priority to ECHS members and dependents above 75 years age in ECHS OPD of Military Hospitals has been issued to all Command Headquarters and Regional Centres vide Central Organisation ECHS letter No. B/49701-PR/AG/ECHS/2019 dated 12.9.2019. . Guidelines for laying down a comprehensive and objective procedure for more effective management of empanelled hospitals for ensuring greater transparency and accountability, paving the way for improved patient care and delegation of powers thereof to MD, ECHS issued on 10.10.2019; . A total of 27 Job Fairs have been held since September 2014 at different locations which were attended by 888 Corporate and 32210 people to include ESM, widows, Veer Naries and prospective retirees. In the current Financial year, 5 Job fairs have been held at Ahmedabad, Chandigarh, Pune, Kolkatta and Chennai where 174 Corporate and 7082 people participated. Three more job fairs are planned at Bengaluru, Jaipur and Lucknow during the current Financial Year. . Approval of the Government for recognition of the following ESM Associations has been accorded vide MOD / DESW letter no. F.No 28(145)2019/D(Res-I)

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dated 16 September, 2019:- (i) Disabled War Veterans (India) (ii) Indian Ex-Services League (IESL) (iii) Air Force Association (iv) National Ex-Servicemen Co-ordination Committee

. Request for Proposals (RFPs) for selection of training institutes for skilling of serving / retired soldiers through Resettlement Training Courses in the Financial Years 2020-21 and 2021-22 have been completed and Board Proceedings being progressed through Internal Finance for approval. This will facilitate skill development of the retiring/ retired service personnel to qualify them for broader and more diversified employment opportunities rather than being limited to security related jobs. For the current year (2019-20), adequate training institutes have already been selected for conduct of 13 courses for 560 Officers and 158 courses for 6370 JCO/OR. . MOU signed by DGR with FICCI on 27.1.2020. This will increase the participation of corporates and resultant placement of ESM in the Corporate jobs. . 4 State ESM Corporations have been empanelled by DGR enabling them to be sponsored for allotment of security agency contracts. . ‘Technical Services’ - New Scheme introduced for providing technical ESM manpower to strategic establishments. . An Interactive Voice Response System (IVRS) for the KSB Helpline [01126717987] was launched on 6.9.2019. It can simultaneously attend 20 calls in Hindi and English and will reduce the waiting time for the grievance redressal of the ESM. This will enable ESM with technical queries, easier excess to the operator as the majority of queries on helpline are regarding the status of the applications and will get resolved by the IVRS itself. . Renovated/upgraded Central Sainik Rest House (CSRH), Naraina was inaugurated on 6.9.2019. The upgradation of 10 rooms and addition of 2 guest rooms with better facilities and décor will give decent accommodation to ESM at an affordable rates in the capital. . 35 MBBS and 3 BDS Seats have been allotted under the nominee quota allotted by Ministry of Health and Family Welfare in 2019. This is nearly double than previous years annual quota of 20 seats (18 MBBS, 2 BDS). . Around 400 seats under various Medical Colleges across States have been allotted to the eligible candidates under ESM quota reserved for them in the current Academic Year. . Further, approx 5000 seats in various Educational courses under ESM quota reserved by Delhi University have also been filled during the current Academic Year.

Uniformity in payments of ex-gratia amount to the dependents of martyrs

8.13 During discussion on DFG 2020-21, the Committee raised the issue of uniformity in payments of ex-gratia amount to the dependents of martyrs. In response, the Secretary, Department of Ex-Servicemen Welfare submitted as under:-

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“.....we have already taken it up. We have written several times to the State Governments that they should enhance this amount particularly the well-off State should not have any problem to increase this amount. Some States, in response to our suggestions, have also increased the amount but the fact remains that many States are following their own policy and our persuasion is an on-going process. We have been writing to them and we will continue to do it. But this is an area where we have to depend only on persuasion. We cannot compel them but we have been trying to bring it to their notice and make them understand that this is an important area and showing respect and helping them is an important part of their mandate also.”

Other relevant issues

8.14 In their Power Point Presentation before the Committee, the Ministry apprised the Committee that 35 MBBS and 3 BDS Seats have been allotted under the nominee quota allotted by Ministry of Health and Family Welfare in 2019. This is nearly double than previous year’s annual quota of 20 seats (18 MBBS, 2 BDS). Further, around 400 seats under various Medical Colleges across States have been allotted to the eligible candidates under ESM quota reserved for them in the current Academic Year. A representative of the Ministry elaborated on this aspect during the oral evidence:

“िमिन ी ऑफ हे एंड फैिमली वेे यर हम वैक सी का ब कोटा रलीज कर देता है।अभी तक 20 मेिडकल सीट और तीन बीडीएस सीट पहले से िमलता रहा है।इस वष हम 35 मेिडकल सीटऔर 3 बीडीएस सीट एलॉट िकए गए ह।इसका सेलेन हम डायरेली करते ह।जो बे नीट म ालीफाई कर जाते ह, उनका हम मेरट िल बनाते ह।उन बों का ाइऑरटी सबसे ादा है, िजनके िपता फौज म काय करते ए शहीद ए ह।उस तरह की ाइऑरटी से मेरट िल िनकालकर हम वापस हे िमिन ी को देते ह और वे सीट्स हम एलॉट हो जाते ह।“ 8.15 During deliberations on DFG 2020-21, the Committee raised the issue of non- receipt of share of funds from the Central Government, especially w.r.t. four Sainik bhawans at Nalgonda, Nizamabad, Mahbubnagar, and Khamman in Telangana. The Secretary, KSB replied as under:

“सर, जो चार सैिनक रे हाऊस ह, इनका इन िंिसपल अुवल दे िदया गया था, इसके बाद ेट लड एलॉट िकया, कुछ जगहों पर कं न शु भी हो गया, इनके डॉुमेशन कलीट होने ह। पीडूडी के इमेट्स ह, उसम बार-बार किमयां आने की वजह से अभी हाल ही म उनके सारे डॉूमट दुबारा चेक करने पर भी कुछ कमी रह गई है, िजससे दुबारा ेट म भेजा गया है। म यकीन िदलाना चाहता ं िक जब डॉूमट सही हो जाएंगे, पचास ितशत शेयर को िदया जाएगा। “

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8.16 The Committee also pointed out that uniformity should be maintained across the country while providing exemption on toll tax to the personnel who have been awarded by the Services. They also highlighted need for awareness among the serving or retired Servicemen regarding the benefits/facilities extended to them to avoid their exploitation.

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CHAPTER IX

EX-SERVICEMEN CONTRIBUTORY HEALTH SCHEME (ECHS)

The ECHS was launched with effect from 01 April, 2003. The aim of ECHS is to provide quality healthcare to Ex-Servicemen (ESM) Pensioners and their dependants.

Organisation of ECHS

9.2 The ECHS Central Organisation is located at Delhi and functions under the Chief of Staff Committee (COSC) and is headed by Managing Director, ECHS, a serving Major General. There are 28 Regional Centres, 427 ECHS Polyclinics and 2634 hospitals empanelled for providing treatment. ECHS has membership of approximately 56 lakhs including veterans and their dependants. 353 out of 721 districts of the country are covered under ECHS. ECHS is also an attached office of Department of Ex-Servicemen Welfare (DoESW), Ministry of Defence.

9.3 The existing Command and Control Structure of the Army, Navy and Air Force have been given the Administrative and Financial Powers to run this Scheme. Station Commanders exercise direct Control over the ECHS polyclinics. Regional Centres ECHS are under Command HQ/ Area HQ. Central organization ECHS functions as a part of Adjutant General’s Branch, Army HQ.

Budget 2020-21

9.4 During presentation before the Committee, a representative of ECHS informed them about Capital and Revenue Budget allocated to ECHS for 2020-21. ECHS has been allocated ₹ 3,301.98 crore under Revenue (BE) Head, against the projection of ₹ 6,892.00 crore. The amount of ₹ 51 crore has been projected for capital expenditure for 2020-21 BE.

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9.5 The details of expenditure by ECHS for the last five years are as follows:

(₹ in crore)

FINANCIAL ALLOTMENT EXPENDITURE CARRIED FWD YEAR LIABILITY

2015-16 2562.86 2547.95 1061.26

2016-17 2896.50 2905.82 1282.62

2017-18 3928.70 3864.47 1097.35

2018-19 3198.02 3223.55 2201.06

2019-20 4872.29 3122.10 1947.39* 2020-21 3301.98(indicated) N/A

*Pendency of Medical Treatment related Expenditure (MTRE) as on date

9.6 During deliberations on the subject, the Committee raised the issue of pendency of payments of bills of hospitals empanelled under ECHS. The Managing Director, ECHS, in response, deposed as under:

“Since this point has been raised, actually this scheme, if you examine the last five years, is under-funded from the point of view of carry forward liability. In the last five years, on an average, the funds allotted are around ₹ 3,200 crore and an average carry forward liability every year is ₹ 2,200 crore. On an average, it needs about 4,700 crore but at BE stage, we were getting ₹ 3000- 3200 crore. So, that is why, there is a lapse in payments to the empanelled hospitals.

So, in this particular year, at the RE stage, that is, in the third week of January, we got ₹ 1591 crore only for payment to hospitals. This amount has come very recently. We will be able to disburse it in the financial year because we have a huge pendency of around ₹ 1900 crore as on date.”

Authorised and actual manpower for ECHS Polyclinics

9.7 The details of authorized and actual Manpower at ECHS Polyclinic are as under:

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Sl. Appointment Authorised Actual No. Manpower Manpower (i) Medical Officer 955 962 (ii) Medical Specialist 200 152 (iii) Radiologist 61 00 (iv) Gynaecologist 61 70 (v) Dental Officer 471 374 (vi) OIC Polyclinic 410 409 (vii) Para Medical 2528 2526 (viii) Driver 488 466 (ix) Non-Medical Staff 1640 1618 Total 6814 6577

* 61 Radiologist have not been hired due to non-availability at high pressure stations and Atomic Energy Regulatory Board (AERB) Certified Laboratories at other locations.

9.8 When asked to specify the measures taken by the Ministry of Defence to address the shortfall, if any, the MoD submitted as under:-

“Continuous efforts are made to fill up vacancies as soon as they arise, through advertisements. Adhoc hiring is being carried out wherever feasible. Vacancies are published in local newspapers and also on the ECHS website by the concerned station Hqrs.”

9.9 During oral evidence of the representatives of the Ministry, the Committee pointed out the lack of radiologists in ECHS Polyclinics. In this regard, the MD, ECHS submitted as under:

“There is a problem of hiring medical specialists, sometimes even hiring gynaecologists and radiologists also. This is probably because of the pay, which is laid down for them, which is about ₹ 1 lakh. Except in some places, which are urban-oriented, it is very difficult to find this particular lot of doctors. But however, this has been addressed recently. So, instead of giving fulltime, we are now offering an hourly basis consultation. So, this should work out in most of the places.”

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Merger of Military hospitals with existing ECHS Polyclinics

9.10 On the feasibility of merger of Military hospitals with existing ECHS Polycllinics, the MD, ECHS apprised the Committee as under:

“As far as merging of polyclinics is concerned – this point was given last time also – there is an exercise, which is on where the spare capacities of most of the military hospitals can be utilised. There are about 129 military policlinics, out of which, about 100 have been identified which have been close to the military hospitals. Out of these 100 based on the spare bed capacity and capacity of polyclinic, it is being examined as how a measure can take place.”

Major achievements of ECHS

9.11 The representatives of the MoD, during their Power Point presentation before the Committee, specified the major achievements of ECHS as under:

MAJOR ACHIEVEMENTS

a) Empanelment of Hospitals  2634 medical facilities empanelled with ECHS b) Reimbursement of Treatment  Sanction for reimbursement of treatment at Govt. Hospital at Actual at Govt. Hospitals at Actual Expenditure Expenditure c) Extension of "On-line Billing'  All 28 Regional Centres are under Online System d) Revision in Remuneration:  Remuneration of Contractual Staff in Contractual Staff Polyclinics revised w.e.f. November 2015 and May 2016 e) Operationalisation of  427 Polyclinics made functional till date Polyclinics

f) Commencement of Online  Sanction of O/o CGDA for Audit of Bills implementation of the Audit Module has been accorded g) 24 x 7 helpline has been functional h) Fixed Medical Allowance (FMA) granted to beneficiaries residing in districts not covered by ECHS

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i) Delegation of financial power to MD, ECHS and other ECHS authorities j) 64 KB Smart Card introduced k) Exemption obtained from Ministry of Finance in respect of ECHS contribution under Section 80D of IT Act 1961 l) Persons with Disabilities (PWD) Act, 2016 implemented in ECHS m) Authorised Local Chemist (ALC) system of CGHS introduced for procurement of NA medicines. Members also allowed to purchase and seek reimbursement of NA medicines n) Three ECHS PC Tenga, Tawang and Indore operationalised (yr 2018-19) o) ECHS facilities extended to World War II Veterans, Short Service Commissioned Officers (SSCOs), Emergency Commissioned Officers (ECOs) and Non- Pensioners p) ECHS facilities granted to Assam Rifles Pensioners q) Full Payment in Non Empanelled Hospitals in emergency cases r) Travelling Allowance rules for ECHS Patients liberalised s) AYUSH system health care provided to ECHS beneficiaries t) ECHS facilities to the Ex-Sailors, appointment prior to 03.07.1976 and discharged on or after 03.07,1976 on expiry of 10 years of active services u) SOP for disciplinary action against Diagnostic Centres/Medical facilities notified v) Grant of Fixed Medical Allowance (FMA) to Pensioners and Family Pensioners, who are ECHS Members and residing in districts of Nepal not covered by ECHS PCs, Armed Forces Clinics/Medical Inspection (MI) Rooms

Expansion of ECHS

9.12 As regards the steps being taken to increase the reach of ECHS in far flung areas, the Ministry in their reply submitted as under:

“Under the scheme there is provision for Mobile Polyclinics for catering to requirements of far flung areas. 17 Mobile Polyclinics have been sanctioned in

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the State of Uttarakhand, Karnataka, Himachal Pradesh, Assam, Arunachal Pradesh, Punjab, Madhya Pradesh, Jammu and Kashmir and West Bengal. Also, a proposal for opening of new ECHS Polyclinic is under consideration.

Fixed Medical Allowance (FMA) has been granted to all ECHS beneficiaries who are residing in far flung areas where Polyclinics are not available.”

9.13 On a specific query of the Committee regarding measures being contemplated / put in place to provide the facilities of mobile ECHS polyclinics and other relevant medicare facilities, particularly for women and children, in remote areas of the country, the Ministry submitted as under:

“(a) Fixed Medical Allowance (FMA) has already been authorised to all ECHS beneficiaries who are residing in far flung areas where Polyclinics are not available from 01 November, 2018. (b) A proposal for opening of 102 New Polyclinics is under consideration. (c) Proposal for procurement of ambulances and Mobile Medical Units is under process.”

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CHAPTER X DEFENCE PENSION

The Committee learnt that Defence Pensions, under the Ministry of Defence provides for Pensionary charges in respect of retired Defence personnel (including Defence civilian employees) of the three services viz. Army, Navy and Air Force and also employees of Ordnance Factories etc. It covers payment of Service pension, gratuity, family pension, disability pension, commuted value of pension, leave encashment etc. The position of budgetary allocation under this head is as under: (₹ in crore)

BE 2019-20 RE 2019-20 BE 2020-21

1,12,079.57 1,17,810.44 1,33,825.00

10.2 The Committee have been given to understand that the requirement of ₹ 1,33,825.00 crore for BE 2020-21 has been worked out after taking in to account the variation of ₹ 21,745.43 crore over BE 2019-20 (₹ 1,12,079.57 crore) is mainly due to Dearness Relief announced by the Government and growth in pension. There is also increase in amount of Gratuity, Family Pension, Leave Encashment and Superannuation and Retirement Benefits as a result of increase in number of retirees.

10.3 The Committee have learnt that there are total 32,35,730 crore Defence Pensioners which include 6,01,783 Defence Civilian Pensioners and 26,33,947 Armed Forces Pensioners. Approximately 55,000 Defence Pensioners are added each year.

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Tax Exemption on disability Pension

10.4 During deliberations on DFG 2020-21, the Committee raised the issue of income tax exemption on disability Pension. In this context, the Chief of Defence Staff apprised the Committee as under:

“ …. I would like to highlight that the disability pension includes battle casualty pension, and those who have got disabled due to lifestyle diseases or other issues. Battle casualties were used to be given some pension from 1971. Actually, it started with the British Regime. Then, it came up in 1971, revised in 1985, and then in 1996. So, the policy kept getting revised. After the 6th Pay Commission, what happened was that the disability pension became a part of your retiring salary, that is, the last salary which you drew at the time of retirement. So, if the disability is suffered by an Officer and also by a Jawan, because of the disability becoming a part of the last pay drawn, there is a very wide variation of pension between the Officers and the Jawans for the same disability. I will give you an example. Suppose an Officer is suffering from a disability. Let us say, he has got one leg amputated. On the other hand, if a Jawan is also suffering from the same disability, the difference in pension could be as high as four times.”

10.5 He further added in this connection:

“When I have been meeting the Jawans, the grievance has come from the Jawans as to why is this variation there. The reason is that because it is a part of your last pay drawn; your last pay drawn had a variation. They are asking that can they not narrow this gap. So, one of the ways of narrowing this gap is this. Those who are drawing exceptionally high pension, can they not pay a little amount of Income Tax? It is not applicable to a Jawan because in spite of his disability pension being given to him, he is not coming into the tax bracket of ₹ 5 lakh as per the new tax regime. So, we are not trying to say that the person with disability, in any way, should not get his dues. The issue is, the person who suffers the disability continues to be looked after by the Service. It is not that by giving him that extra money, we ask him to look after him himself. We are still providing him the medical care. If any limb is required to be replaced, or he has lost his limb, it is still provided by us free of cost. So, the continuous medical support is given to him by the service. It is only that this wide variation which is creating heartburn between the men and the Officers is not being understood by the Officers. This is the basic reason.”

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10.6 In the same context, the Secretary (Defence Finance) also deposed as under: “I just want to clarify one thing. We got a clarification on this issue from the CBDT. It very clearly says:

‘The tax exemption will be available only to armed forces personnel who have been "invalidated" from service on account of bodily disability attributable to or aggravated by such service and not to personnel who have been retired on superannuation or otherwise.’

So, if someone has had a war injury, and he is invalidated from the service, he will get the tax exemption.”

One Rank One Pension (OROP)

10.7 The Committee have been given to understand that Government of India had taken historic decision to implement OROP in November 2015 and issued orders on 7.11.2015 for implementation of OROP for the Defence Forces Personnel. Detailed instructions relating to implementation of OROP along with tables indicating revised pension for each rank and each category was issued on 3.2.2016.

10.8 As further given to understand, the salient features of the OROP are as under:-

(i) Pension of the past pensioners would be re-fixed on the basis of pension of retirees of calendar year 2013 and the benefit will be effective with effect from 01.07.2014.

(ii) Pension will be re-fixed for all pensioners on the basis of the average of minimum and maximum pension of personnel retired in 2013 in the same rank and with the same length of service.

(iii) Pension for those drawing above the average shall be protected.

(iv) Arrears will be paid in four equal half yearly installments. However, all the family pensioners including those in receipt of Special/Liberalized family pension and Gallantry Award Winners shall be paid arrears in one installment.

(v) The pension would be re-fixed every 5 years.

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10.9 Personnel who opt to get discharged henceforth on their own request under Rule 13(3) I(i)(b), 13(3)II(i)(b), 13(3)III(iv) or Rule 16B of the Army Rule 1954 or equivalent Navy or Air Force Rules will not be entitled to the benefits of OROP. It will be effective prospectively.

10.10 A sum of ₹ 10,795.4 crore has been disbursed up to 30.9.2017 (compiled till 1.5.2018) to Defence Pensioners/Family pensioners on account of implementation of OROP and the installment-wise bifurcation is as under:

No. of Amount No. of Amoun No. of Amount No. of Amount cases disbursed cases t cases paid disbursed cases disburs paid (1st (₹ in crore) paid (2nd disbur (3rd (₹ in paid (4th ed (₹ in installmen instalme sed (₹ installments crore) instalment crore) t and nts) in ) ) lump sum crore) payments ) 2060220 4172.64 159431 2397.2 1576478 2322.91 1356212 1902.63 1

10.11 The Ministry of Defence has also informed the Committee that the Government had appointed One Member Judicial Committee (OMJC) headed by Justice L. Narasimha Reddy, Retired Chief Justice of Patna High Court to look into anomalies, if any, arising out of implementation of OROP. The Committee submitted its Report to the Government. An Internal Committee has been constituted to examine the recommendations of OMJC with respect to the feasibility, impact of recommendations on other existing provisions and financial aspects in implementation of the recommendations.

10.12 When asked to delineate steps being taken to address the grievances and discontent of Ex-servicemen/family pensioners w.r.t. OROP, the Ministry of Defence submitted as under:

“There is a separate category for grievances regarding OROP Policy issues in the Centralized Public Grievance Redress and Monitoring System (CPGRAM). Grievances registered by individual and associations on this portal are

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examined as per the extant policies and replies are sent to the petitioners in a time bound manner.”

10.13 As regards the next revision of Pension under OROP, the Ministry of Defence apprised the Committee as under:-

“Next revision of pension under OROP is due w.e.f. 01.07.2019. With the approval of Hon’ble Raksha Mantri, orders have been issued on 14.6.2019 to constitute a Committee under the Chairmanship of Controller General of Defence Accounts (CGDA) to work out the modalities and methodology of implementation of next revision of pension under OROP. The Committee will submit the report to MoD with specific recommendations on modalities and methodology of implementation of next revision of pension under OROP.”

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CHAPTER XI

SANIK SCHOOLS The Committee have been apprised that presently, there are 33 Sainik Schools in the country and 15 new proposals for Sainik Schools are under consideration by the Ministry of Defence.

11.2 The primary aim of Sainik Schools is to prepare cadets for entry into the National Defence Academy and Naval Academy.

11.3 The funding pattern of the Sainik Schools, as apprised to the Committee, is as under:

State Government Land 40 – 50 Acres Building Approx ₹ 100-150 crore for New Schools Maintenance & Varies from State to State (01 – 05 Cr) Scholarships Central Government Defence Scholarships Central Assistance NDA Incentive Fee and Dietary Subsidy Total ₹ 40.40 crore (2019-20) Additionality due to 6th CPC Requested for additional ₹ 74.18 crore & 7th CPC IT & Training Grant Grant-in-aid for Infrastructure Development Parents Tuition Fee (₹ 79860) Total Approx Charges – ₹ 115360/- P.A Dietary Charges (₹ 21500) (2019-20) Pocket Money (₹ 1500) (10 percent increase in Tuition fee/annum) Miscellaneous (₹ 9500) Caution Deposit (₹ 3000)

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Role of State and Central Governments in the functioning of Sainik Schools

11.4 The Committee have learnt that during 1960s, the scheme of Sainik Schools was conceived as a collaborative effort between the Central Government and State Government so that the parts of the country, which did not have this kind of facility, should have Sainik Schools to remove regional imbalance in training for joining Defence Forces. It is for this purpose that the scheme envisages 67 percent reservation for students domiciled in the State where the Sainik School is located.

11.5 Further, the joint ownership and stake in opening and running of a Sainik School is vital for smooth functioning of the Sainik Schools. The scheme therefore ensures jointness in responsibility and pooling of resources by the Central and the State Government. The purpose of asking for the proposal from the concerned states for setting up of Sainik School is an attempt to assess the keenness and commitment of the State for sharing joint responsibility for setting up of a Sainik School and allocating necessary financial resources in this regard. It also stands to reason that for practical purposes running a school on daily basis requires active and positive support of the local administration/State Government.

11.6 As submitted by the Ministry of Defence, details of the role and responsibilities of the State Government/Union Territory are as under:

“Sainik Schools are opened in a State only on receipt of a specific request from the State Government. The responsibility of the State Government./Union Territory for opening a Sainik School under Rule 1.23 of Sainik Schools Society (Rules and Regulations) 1997, is as under:-

(a) Provision of a minimum of 38 acres land for a Sainik Schools with the strength of 300 students and 49 acres land for a Sainik School with strength of 600.

(b) Construction of permanent buildings including:- (i) Administrative Block (ii) Educational Block (iii) Dormitories and Mess Hall

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(iv) Indoor Games Hall (v) Residential accommodation for all members of the academic/administrative staff as well as general employees (vi) Swimming Pool, Auditorium, Gymnasium and others sports amenities. However, for setting up new Sainik Schools, after 1996 the requirement of a swimming pool and a covered auditorium has been relaxed.

(d) Maintenance of the School campus and building

(e) Grant of scholarships to all the boys belonging to the economically weaker sections of society on the rates decided by the Board of Governors.”

11.7 As far as role of the Union Government is concerned, it includes posting of suitable Service Officers for the posts of Principal, Vice Principal and Administrative Officer in the Sainik Schools. The Ministry of Defence also provides training grants to the schools regularly to upgrade their training infrastructure and skills. An annual inspection of schools is carried out to monitor the functioning of the schools. Training programmes for teaching faculty, other staff and workshops for officers are conducted regularly to enhance their professional competence.

11.8 The Ministry have submitted the details of role/responsibilities of Central Government (MoD) as under:

(a) Positioning of three officers, one each of the rank of Col./equivalent, Lt. Col./ equivalent and Major/equivalent to each school. Their salaries and other allowances are paid from Defence Service Estimates. (b) NCC Staff and Army Physical Training Corps instructors also provided by the Ministry of Defence. (c) Scholarship to the wards of Defence Personnel including Ex- servicemen. (d) Provision of part of Scholarship as Central Assistance to those students who are awarded State Government Scholarships. (e) Incentive to those cadets who are selected for National Defence Academy/Naval Academy.

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(f) 100 percent additionality towards Pay and Allowances arising due to implementation of 6th CPC and 7th CPC. (g) Training Grant to the tune of ₹ 10 lakh to each school every year. (h) Grant-in-aid for Infrastructural development to the tune of ₹ 1 crore to each school every year based on their proposals.

Board of Governors

11.9 The Committee have learnt that a Board of Governors, functioning under the Chairmanship of the Raksha Mantri, is the Chief Executive body of the Sainik Schools Society. The membership of the Board inter alia constitutes of Raksha Rajya Mantri / URM (Minister in charge of Sainik Schools in Ministry of Defence), Chief Ministers or Education Ministers of the States where the schools are established, Defence Secretary, Education Secretary, Financial Advisor, Ministry of Finance (Defence), Chairman of University Grants Commission, Vice Chiefs of Staff or the Principal Staff Officers dealing with Education in the three Defence Services, Director General of NCC and Education Secretary of each State Government.

Budget 2020-21

11.10 The details of Budget allocation for Sainik Schools during last five years as furnished to the Committee are as under:

(₹ in crore) Financial year Budget Projected Budget Allocated 2015-16 75.00 74.94 2016-17 95.00 81.38 2017-18 80.00 80.00 2018-19 124.00 84.22 2019-20 115.00 40.40 2020-21 116.00 Yet to be allocated by DGFP

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Admission of Girl Students in Sainik Schools

11.11 The Committee desired to be apprised of the details regarding existing and required infrastructure for girl students in the Sainik Schools in the country and the steps being taken to expedite admission of girl students in Sainik Schools in terms of necessary infrastructure and teaching staff. In this regard, the Ministry through its written submission apprised the Committee as under:

“Based on the success of the Pilot Project for admission of girl children in Sainik School, Chhingchhip in Mizoram for two years from the academic session 2018-2019, the Government has decided to continue girls’ admission in Chhingchhip and also to implement the decision of admission of girl children in other Sainik Schools. Besides, admission of girl children in 05 Sainik Schools viz. Kalikiri (Andhra Pradesh), Kodagu (Karnataka), Gorakhal (Uttarakhand), Chandrapur (Maharashtra) and Bijapur (Karnataka) has also been approved and admission process is under way for admission from academic session 2020-2021. In remaining Sainik Schools of the country, admission of girl children will be implemented from the academic session 2021-22.

The following steps are being taken by the Sainik Schools for smooth induction of the girl cadets into Class VI w.e.f. 2021-22:-

(a) A separate hostel with barbed wire fencing to be provided for the girl cadets to ensure their safety.

(b) To ensure the security and well-being of girl cadets in hostel, the following personnel are required exclusively to look after the girl cadets:-

(i) One Matron cum Physical Trainer who accompanies the girl cadets throughout the day in all the training activities. (ii) One Nursing Sister for the medical requirements for the cadets. (iii) Two female General Employee for housekeeping and maintenance of Girls Hostel.

(c) Separate washrooms to be provided to the girl cadets in the Hostel, sports fields, auditorium, mess and academic block for their convenience and ease.

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(d) CCTV cameras to be installed at various places for the safety of girl cadets.

The girl cadets are to be trained along with the boy cadets in the same training pattern which involves Academics, PT, Games, Drill and other Co-curricular activities for their overall growth. They are to be given equal opportunities in the School to develop as cadets and join the Defence Forces in future.”

Intake of Sainik School Students into NDA

11.12 During a presentation before the Committee, the representative of Sainik Schools furnished following information regarding intake of Sainik School students into NDA:

Year of Course NDA Course No. of SS % of SS Cadets Pass out Numbers Strength Cadets

2013-14 132 and 563 121 21.5 133

2014-15 134 and 604 147 24.3 135

2015-16 136 and 595 158* 26.6 137

2016-17 138 and 644 179 27.8 139

2017-18 140 and 662 147* 21.5 141

2018-19 142 and 638 148 23.2 143

11.13 The Committee enquired about the percentage of Sainik School students as compared to that of non-Sainik School students joining NDA. In response, the Inspecting Officer, Sainik Schools Society informed the Committee that almost 18 per

170 cent is the success rate for Sainik Schools whereas it is 0.1 per cent to 0.2 per cent for the cadets coming from the civil schools.

11.14 The Defence Secretary supplemented by stating: “…..today Sainik School quality is one of the best. Lot of students who are coming, in fact, we have also seen cases, they are all required to sit in NDA but they do not want to go for because they see better opportunities in other sectors. So, lot of people, today, are in various other fields doing extremely well. What people really value is the whole education system.”

Challenges and Constraints

11.15 In a written submission to the Committee, the Ministry of Defence enumerated the challenges and constraints being faced by the Sainik Schools as under:-

“Sainik Schools have played a unique role as a recruiting and training ground of future leaders of the armed forces. The Sainik Schools, true to its aim, have contributed more than one fourth of NDA intake during the last decade despite various constraints. The following are few major problems faced by these schools and the measures taken by the Ministry to resolve the problems:-

(a) Shortage of Funds: The MoD has been allocating grants to schools based on utilization and to the extent received from the Directorate of Financial Planning. This year (2019-20), out of the total projected amount of ₹ 115 crore, only ₹ 40.40 crore has been received. A major issue is the lack of certainty and a steady source with regard to the funds. Most of the Sainik Schools are facing severe financial crunch and are struggling to meet the expenditure in the under mentioned areas:-

(i) Pay, Allowances and Pensions of staff after implementation of VI and VII CPC (ii) Infrastructure Grant (iii) Training Grant. (iv) DA Incentive and Sharing of Burden (v) Defence Scholarship (vi) Central Assistance

(b) Inadequate Infrastructure Not all Sainik Schools are well endowed in the matter of land, buildings and infrastructure. Many years after their commencement, Schools such as Sainik School Rewari, Sainik School Gopalganj, Sainik School East Siang and Sainik School SujanpurTira continue to have inadequate infrastructure. The maintenance of the

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infrastructure is also the subject of the State Government, but the allocation of grants for this purpose also does not meet the actual demand in most of the cases.

(c) Poor Quality of Staff The quality of staff is affected by the location of the school (far flung schools find it difficult to attract and retain the best talent), pay and allowances comparable to that of central government staff (the uncertainty and delay in disbursing pay and allowances have a huge impact on the motivation of the staff which again not only affects the interpersonal relationship but also the quality of their output) and in-service training (fortunately on this front the Sainik Schools Society under MoD has been organizing annual workshop for teachers).

(d) Lack of Manpower Due to the financial constraints, schools are not given the sanction to recruit the full complement of staff (e.g. even crucial appointments such as Doctor, Counsellor, Physical Education Master, Hostel Superintendents etc. are on contractual basis). As far as the officers- Principal, Vice Principal and Administrative Officer- are concerned, with the growing number of Sainik Schools and no accretion being given while sanctioning these posts, the three services are facing difficulty in sparing officers with the requisite Qualitative Requirements.”

11.16 During oral evidence before the Committee, the Secretary (Defence Finance) apprised the Committee of the steps being contemplated to obviate the challenges being faced by the Sainik Schools:

“Sir, I just want to bring it to the notice of the Committee that the funds are given from the Army Budget. So, it is not allocated separately for Sainik Schools. What we can do to help out Sainik Schools is that we can create a head ‘Grant-in-Aid’ under the Army Budget only, and earmark it for Sainik Schools…………. in the last Governing Board Meeting of Sainik Schools, it was decided that they are working in a very ad-hoc manner; they do not have even a finance committee. It is an autonomous body actually. Sainik Schools is a Society under the Army. So, they have to function like a proper society. They do not even have finance committee or budget committee, finance members. So, I have been authorised by the Governing Body that we will set up their finance committee and authorise it. They have a kitty also. I have to look at it whether they can use the funds from the kitty for their sustenance. Minutes have just come. We will look at it. सर, हम आर.आर.एम के अूवल से इनका ीमलाइन करगे।“

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OBSERVATIONS/RECOMMENDATIONS

GENERAL DEFENCE BUDGET

Ministry of Defence Budget and Demands for Grants 2020-21: A bird’s eye view

One of the paramount functions of the Standing Committees is to consider the Demands for Grants of the concerned Ministries/Departments and make Reports on the same and present them to the Houses. To be precise, such Committees play a pivotal role of ensuring Executive and Financial accountability. With this mandate, the Standing Committee on Defence have examined and finalized four Reports. The recommendations of the Fifth Report (Seventeenth Lok Sabha) on General Defence Budget are brought out in succeeding paragraphs.

2. The Committee find that there are four Demands for Grants pertaining to the Ministry of Defence viz. Grant Number 18 – Ministry of Defence (Civil), Grant Number 19–Defence Services (Revenue), Grant Number 20 – Capital Outlay on Defence Services and Grant Number 21 – Defence (Pension). The Committee also find that the total budget for the Ministry of Defence for 2020-21 stands at ₹ 4,71,378.00 crore. Out of this, 68.53 percent, i.e. ₹ 3,23,053.00 crore has been allocated for Defence Services Estimates (DSE), which is conventionally known as India’s Defence Budget. The Defence Services Estimates reflects the detailed estimates for the Defence Services and Organizations covered under Grant Number 19 {Defence Services (Revenue)} and Grant Number 20 (Capital Outlay on Defence Services) of the Ministry of Defence. The Services and Organizations covered under DSE are Army (including National Cadet Corps, Director General Quality Assurance, Military Farms and Ex-Servicemen Contributory Health Scheme), Navy (including Joint Staff), Air Force, Defence Research and Development Organization (DRDO) and Defence Ordnance Factories.

The Committee note that Defence Pensions has claimed 28.39 percent of the total budget i.e. ₹ 1,33,825.00 crore. Defence Pensions, under Grant number

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21, provides for Pensionary charges in respect of retired Defence personnel (including Defence civilian employees) of the three services viz. Army, Navy and Air Force and also employees of Ordnance Factories etc. It covers payment of Service pension, gratuity, family pension, disability pension, commuted value of pension, leave encashment etc. The remaining 3.08 percent of the total budget i.e. ₹ 14,500 crore have been allocated to Ministry of Defence (Civil) {Grant Number 18}. The requirements for the Civil expenditure (both revenue and capital) of the Ministry of Defence Secretariat, Defence Accounts Department, Canteen Stores Department, Defence Estates Organisation, Coast Guard Organisation, Jammu and Kashmir Light Infantry (JandK LI), Border Roads Organization, etc. are covered under Grant Number 18.

Defence Budget 2020-21 and 2019-20

3. A detailed examination of the facts and figures provided by the Ministry of Defence on expenditure on Ministry of Defence (Civil), Pensions and Defence Services Estimates, reveals that allocation under these three Grants has shown an increase of ₹ (-) 361 crore, ₹ 16,015 crore and ₹ 6,757 crore in 2020-21 Budget Estimates (BE), respectively, when compared to that in 2019-20 Revised Estimates (RE). The total Defence Budget for 2020-21 BE is ₹ 4,71,378.00 crore, an increase of ₹ 22,558 crore in comparison to that of 2019-20 RE. It is a matter of concern that as compared to 2019-20 RE, while the total Defence Budget and Defence Services Estimates have shown an increase of 5.03 percent and 2.14 percent, respectively, Defence Pension has exhibited an increase of 13.6 percent in 2020-21 (BE). This aspect has been dealt in succeeding paragraphs of this Report.

Growth of Defence Budget vis-à-vis rate of inflation

4. The Committee learn that the annual rate of inflation, as per the Economic Survey 2019-20 based on Consumer Price Index -Combined, increased to 4.1 percent (provisional) in 2019-20 (April to December, 2019) as

174 compared to 3.7 percent in 2018-19 (April to December, 2018). Based on Consumer Price index, the inflation stood at 7.35 percent (Provisional) in December, 2019 as compared to 2.11 percent in December, 2018. The actual increase at the stage of Revised Estimates 2019-20 i.e. ₹ 3,16,296.07 crore amounts to 5.84 percent after adjusting inflation. The Committee, therefore, aver and recommend that allocations for Budget for the Ministry of Defence for 2020-21 at Revised Estimates stage should be increased in proportion to inflation so that actual increase in the funds to meet the Capital and Revenue requirements of the Forces may not be hindered by the vagaries of inflation.

Projections made by the three Services

5. The Committee, after careful examination of the Budgetary figures submitted by the Ministry, infer that the allocations to the Services are not commensurate with the projections at both Budget Estimates (BE) and Revised Estimates (RE) stage consequently. Moreover, the Committee note with glee that the Services have been more or less able to spend the amounts allocated at the stage of RE in the last fiscal year. For the previous financial year i.e. 2019-20, at the stage of RE, Army projected a requirement of ₹ 1,98,456.82 crore for both Revenue and Capital expenditure, but was allocated ₹ 1,72,440.73 crore. In the case of Navy, the projected amount was ₹ 68,860.27 crore for both Revenue and Capital in RE 2019-20, however, only ₹ 48,943.14 crore were provided. Similarly, while the Air Force projected a requirement of ₹ 1,21,684.39 crore in RE 2019-20, only ₹ 74,898.88 crore were allocated. The Committee reiterate that they are pleased to note that for the past few years, the Forces have been able to completely utilize the budgetary allocation at RE stage.

6. Further, the Committee find that for the Budget Estimates 2020-21, the Army projected an amount of ₹ 1,65,228.28 crore under the Revenue Head, but has been allocated only ₹ 1,45,785.88 crore. Under the Capital Head, the projected amount is ₹ 50,373.60 crore but only ₹ 32,462.38 crore have been allocated, which amounts to 64 percent of the projected requirement. Again, for the current year 2020-21, while the Navy projected a requirement of ₹ 32,237.96

175 crore, the allocated amount has been ₹ 22,934.75 crore under the Revenue Head. Under the Capital Head, while the Navy projected an amount of ₹ 45,268.31 crore, the allocated amount is only ₹ 26,688.28 crore, which amounts to approximately 59 percent of the projected requirement. While an amount of ₹ 43,904.17 crore has been projected as the requirement under the Revenue Head by Air Force, ₹ 29,962.66 crore have been provided. Under the Capital Head, while the Air Force projected a requirement of ₹ 66,207.29 crore, the allocation has been only ₹ 43,281.91 crore, which amounts to approximately 65 percent of the projected requirement.

7. The Ministry of Defence in their written submission to the Committee stated that the requirements projected by Services are proposed to the Ministry of Finance for favourable consideration. While allocating funds, the Ministry of Finance analyses past absorption capacity of the Services and the pace of expenditure in the current Financial Year. In addition to this, based on the overall ceilings conveyed by the Ministry of Finance, the Ministry of Defence distributes funds among the Services and Organizations under the Ministry, based on Inter-Services priorities and allocations for critical projects. Again, the Committee would like to highlight here, that taking into consideration this portentous achievement of the Forces where they have been able to completely utilize their funds for past few years as allocated to them at Revised Estimates stage, the Committee perceive that there is no reason that the projected amounts by the Services should not be allocated by the Ministry of Finance. Therefore, the Committee recommend that keeping in view not only their contribution in a war-like scenario but also their role of reconnoitering of national borders during peace time, the Ministry of Defence, armed with reasoning of healthy trend of expenditure of the allocated amount and critical requirements of operational preparedness of the Forces, should vigorously pursue for additional allocation of funds at Revised Estimates stage.

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Chief of Defence Staff (CDS)

8. The Committee had, in their earlier reports, recommended creation of the post of Chief of Defence Staff (CDS) for enabling better co-ordination among the Services. The Committee have learnt that the CDS apart from being the head of the Department of Military Affairs will also be the Permanent Chairman of the Chiefs of Staff Committee. He will act as the Principal Military Advisor to the Raksha Mantri on all tri-Services matters. The major roles assigned to CDS include: -

(a) CDS will administer tri-Services organisations.

(d) Bring about jointness in operation, logistics, transport, training, support services, communications, repairs and maintenance, etc. of the three Services, within three years of the first CDS assuming office.

(e) Ensure optimal utilisation of infrastructure and rationalise it through jointness among the Services.

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(f) Enhance the share of indigenous equipment used by the three Services through preparation of roadmap on indigenization of equipment. He will set objective targets for indigenization and report achievements on annual basis.

(g) Evaluate plans for ‘Out of Area Contingencies’ as well as other contingencies such as Humanitarian Assistance and Disaster Relief.

(h) Implement Five-Year Defence Capital Acquisition Plan (DCAP), and Two-Year roll-on Annual Acquisition Plans (AAP), as a follow up of Integrated Capability Development Plan (ICDP).

(i) Assign inter-Services prioritization to capital acquisition proposals based on the anticipated budget.

(j) Integrate and rationalize international cooperation plans of the Services, including foreign training, exercises and other exchanges in coordination with the Ministry of External Affairs.

(k) Prepare strategy papers on military matters for consideration of the competent authority.

(l) Bring about reforms in the functioning of three Services aimed at augmenting combat capabilities of the Armed Forces.

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The Committee are more than happy to note that the very inception of this idea emanated from the deliberations of the previous Committees and now it has attained finality. The Committee are of the firm view that with the creation of this post vis a vis the new responsibilities assigned to this Department, the Forces would move in the right trajectory for which the Committee has no reason to believe that the Ministry would not extend all the assistance in the due course, especially in terms of finances.

9. The Committee have been further apprised that a demand of ₹ 21.04 crore for establishment and maintenance of the Department of Military Affairs (DMA) headed by the Chief of Defence Staff has been projected for financial Year 2020-21. The Committee recommend that the projected demand for the Department of Military Affairs should be allocated at the earliest to aid smooth functioning of this new Department in the Ministry of Defence. They also hope that creation of the post of CDS will have significant long-term benefits for our Defence sector by adopting a synergized approach to decision making for projects of critical and urgent capabilities and creation of joint entities amongst the Services.

10. The Committee learn that the new Integrated Battle Group (IBGs) are presently under ‘Test Bedding’. They are being raised through internal optimization and restructuring to make the Indian Army lean and agile. The overall purpose of IBGs is to make leaner organizations capable of operating at short notice to achieve designed results, whilst at the same time improving the teeth to tail ratio of each IBG and thus result in saving of manpower. Further, optimization/ restructuring will be carried out within allotted budgetary allocations. While taking note of this innovative and tactile development, the Committee are of the considered opinion that induction of these IBGs in our Forces will be a breakthrough in achieving lethal capacities with minimum manpower liabilities. Therefore, they recommend that all out efforts should be made in raising these IBGs at the earliest and adequate budgetary allocations

179 be provided for the same. They also desire to be apprised of the latest developments in this regard within one month of the presentation of this Report.

Defence Budget: Challenges and Reforms

11. From examination of the Demands for Grants 2020-21, the Committee observe and infer a mismatch between the projected and allocated Defence Budget. They note that as against projection of ₹ 5,74,314.91 crore for 2020-21 (BE), ₹ 4,71,378.00 crore have been allocated for total Defence Budget i.e. a shortfall of ₹ 1,02,936.91 crore. In this regard, the Defence Secretary submitted that there has been an increase of 9.3 percent in the overall budget and an increase of ₹ 4000 crore in Defence Services Estimates in comparison to 2019- 20 budget. The Secretary (Defence Finance) also added that timely expenditure of funds allocated at BE 2020-21 would increase the chances of getting additional allocation at Revised Estimates stage of 2020-21. In this regard, the Committee recommend the Ministry of Defence to adopt sound financial principles to ensure that the allocated funds are spent judiciously and wasteful expenditure is avoided in order to convince the Ministry of Finance to allocate additional funds at Revised Estimates stage.

12. During deliberations on Demands for Grants 2020-21, the issue of burgeoning Defence pension liabilities unanimously emerged as one of the biggest challenges as the pension budget has increased approximately 3.5 times since the last decade. The reasons, as given to the Committee, for increase in pension budget include increase in longevity of people, increased manpower over the years for various new platforms, revision of pension scales from time to time, etc. In this regard, the representatives of the Ministry of Defence apprised the Committee of the steps being contemplated, which include increasing the retirement age, jointness and integration amongst the Services in terms of manpower resources, incorporating technology to supplement boots on the ground, closing down the military farms and some

180 workshops in peace stations and outsourcing some of the services to the private sector, to contain increasing defence pension liabilities. The Ministry is also mulling on the proposal to provide alternate sources of employment for the retired personnel and Short Service Commission for Officers. Another proposal includes providing college education or one year study leave to the men before they leave the Army so that they can leave without pension but a lump sum amount and a qualification to help them settle down thereafter. The Committee are of the view that the said measures being taken to address this serious issue should be implemented after taking into account the best interests of the retiring personnel and the Committee be apprised accordingly. While adopting some kind of alternatives for reducing the burden of pension, the Committee would recommend the Ministry to keep in mind that the interest of the youth intending to join the Forces is not dampened. In essence, the Committee would like to convey that at all existing levels and specialities of the Forces, the youth should remain inveigled to join the Forces. All due diligence should be taken in this regard under intimation to the Committee.

13. The Committee note that the proposals of creation of Defence Renewal Fund for capital acquisitions and border infrastructure, self-financing of Married Accommodation Project through National Buildings Construction Corporation Limited (NBCC) in next eight years and exchange of land with the State Governments/Central Ministries in lieu of land required by Defence are currently under consideration in the Ministry of Defence for mobilizing extra budgetary resources for Defence. Further, through the creation of post of the Chief of Defence Staff, prioritization of procurement to aid synchronized modernization of the Services will be taken up. Also, optimum use of manpower of the three Services, integration of training establishments of the Services to reduce cost involved in infrastructure and logistics will contribute to judicious utilization of Defence Budget. The Committee have been further apprised that Committees have been constituted for Defence Reforms to review existing delegation of financial powers to the Services and reforms in Defence Procurement Manual and Defence Procurement Procedure. In addition to this,

181 the Ministry of Defence has requested the Ministry of Finance for creation of Non-Lapsable Defence Modernization Fund in order to mobilize additional resources. The Committee are satisfied to learn that various measures/ steps/proposals being taken for reforms in our Defence sector and fervently urge that all the stakeholders i.e. the Ministry of Defence, the Services and allied Organizations go the extra mile to ensure optimum utilization of the Defence Budget. They also desire that updates on these steps/measures/proposals be apprised to the Committee within three months of the presentation of this Report. The reform measures and amendments etc. as highlighted to the Committee are linked to different sets of requirements within the Forces. The Committee, therefore, recommend that in heading-wise captions of the steps initiated, timelines for completion, the progress made till the finalization of the Action Taken Notes and the perceived difficulties be intimated to the Committee. In this information, the work done by the said Committees also be included.

Other issues

14. During deliberations on the DFG 2020-21, issue of jawans being stuck or succumbing to the avalanches was brought up. Such a recent case was also highlighted. In this regard, the Committee have been apprised that the best efforts have been made to rescue the jawan from the avalanche. It seems there are certain limitations faced due to unfavourable weather conditions. In this regard, as assured, some kind of formal communication of the latest situation, if not already sent, should be forwarded to the family of the jawan and the concerned. The Committee further recommend that as a precaution, due care should be taken in the future to obviate such instances which have a demoralizing effect on the Forces. Also, steps should be taken to develop or procure more such state-of-the art equipments to rescue our jawans hit/trapped by inclement weather conditions.

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15. The Committee have been apprised that most of the suicide cases, amongst the Forces, have taken place at civil stations and during peace time. In this regard, the Committee recommend that the Forces should strengthen the existing mechanism of identification of vulnerable individuals and counselling them at opportune time. Further, DRDO should research and devise innovative methods and research in this aspect to eliminate the trend of suicide cases among the Forces. In fact, the Defence Public Sector Undertakings (DPSUs) have also been given targets of Research and Development. The Committee were happy to learn that focus has been shifted to promote Indian Industry and priority has also been given to purchase defence products in small lots so that all products do not show up together for maintenance.

BORDER ROADS ORGANIZATION (BRO)

Budgetary Allocation to BRO

16. The Committee note that budget to BRO is given by various other Ministries such as the Ministry of Road Transport and Highways (MoRT&H), Ministry of External Affairs (MEA), Ministry of Home Affairs (MHA) and the Ministry of Development of North Eastern Region (MDoNER), besides the Ministry of Defence. The Committee learn that against the BE projection of ₹ 5871.42 crore, ₹ 5609.50 crore and ₹ 7128.00 crore in 2017-18, 2018-19 and 2019- 20, ₹ 4168.20 crore, ₹ 5484.00 crore and ₹ 5234.22 core, respectively, were allocated to BRO by the Ministry of Defence at BE stage. For 2020-21, ₹ 5711.23 crore have been allocated at BE stage against the projection of ₹ 8060.00 crore.

17. After examination of this data, the Committee found that allocation to BRO has always fallen short of the projected amount. To a specific query of the Committee as to how the Ministry has been has been able to maintain Border Roads in the wake of inadequacy of funds being faced from time to time, the Ministry through a written note replied that resurfacing works are prioritized by

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Directorate General Border Roads (DGBR) as per the availability of funds to BRO. The Committee are of the considered view that due to inadequacy of funds, BRO may face difficulty in performing their significant role of developing and maintaining operational road infrastructure for Armed Forces in Border Areas, contributing to the socio-economic development of the Nation with specific reference to the Border States, developing and maintaining roads to keep open all Lines of Communication and contributing to the overall war effort. Therefore, the Committee recommend that considering prevalent security scenarios, additional funds be allocated to BRO at Revised Estimates stage. They further recommend that feasibility of levying toll tax on heavy commercial vehicles for using roads built/maintained by BRO may be explored for generating revenue for BRO.

Required and existing number of equipment with BRO

18. The Committee have been apprised that based on the requirement of BRO, an Annual Procurement Plan (APP) amounting to ₹ 168.90 crore has been approved for FY 2019-20. As regards the status of procurement of critical equipment, 90 Dozer II equivalent and 150 Tippers have already been procured. The Committee desired to know about the steps taken to fill the gap between required and existing equipment with BRO. In this regard, the Ministry submitted that earlier, the approval for procurement of equipment was based on the approved five year Long Term Equipment Plan which was not realistic with reference to the allocation of budget to BRO. Accordingly, policy guidelines for preparation of Annual Works Plan (AWP) and Annual procurement plan (APP) with reference to fund allocation to BRO have been issued so that the planning of works and the requirement of resources i.e. the size of APP is more realistic. Further, in order to induct the latest Vehicles/Equipment/Plants (V/E/P) in BRO and to complete the preparatory action for timely procurement, enhanced delegation of powers for procurement of both indigenous and foreign construction equipment has been accorded to DGBR. The Committee are satisfied to note these measures and hope that

184 implementation of these measures will completely eliminate the gap between the required and existing equipment with BRO and help them in effective and timely construction of requisite roads and infrastructure.

Construction of Roads by BRO

19. The Committee during their course of examination learn that in order to concentrate simultaneously on the Northern and North-Eastern Borders and for the holistic development of roads in border areas, a five year (2018-23) Long Term Roll on Works Plan (LTRoWP) has been approved for the construction/improvement for 265 roads of length 14224.12 kilometer, 4 Ditch cum Bund (DCB) of length 353.22 km and 4 bridges. The Committee are pleased to learn about this development, nevertheless they also note that about two years are already over since this LTRoWP came into existence. As such the Committee recommend that all roads strategically important approaching to border and approved in the LTRoWP may be considered for construction by BRO. Also they would, though briefly, like to know at what stages the work on each of the three projects mentioned in this paragraph are pending and what are their dates of completion. They would also like to know about the mechanism put in place by BRO, by adjusting all unfavourable scenarios as brought out in the succeeding paragraph and what efforts have been done to contain time and cost escalations.

20. The Committee further note that out of the 273 roads of length 14577.33 km, identified by the Army for construction/improvement, 24 roads of length 936.55 km are in the state of Uttarakhand, 61 roads of length 2295.62 Km are in J&K, 44 roads of length 3185.95 km are in Ladakh and 100 roads of length 5610.43 km are in the North Eastern Region (excluding roads in Bhutan). The Committee are satisfied to note that 75 percent of work has been completed by BRO with regard to construction of 61 Indo-China Border Roads (ICBRs) of length 3323.57 kilometer. The Committee recommend that using state-of-the-art equipment and skilled manpower, BRO should make concerted efforts to strictly adhere to the timelines for construction of excellent quality roads.

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Necessary and timely budgetary support should also be extended to BRO by the Ministry of Defence and other Ministries involved.

Challenges faced in execution of projects and maintenance of roads

21. Through a written submission to the Committee, they find that the Ministry delineated delay in Forest/Wildlife clearance, hard rock stretches, limited working season, difficulties in availability of construction material, diversion of resources due to natural disasters, delay in land acquisition, poor performance of contractors and non availability of local labour as reasons for certain delays in execution of road projects. The Committee are further given to understand that adverse and harsh climatic conditions, non availability of sufficient labour, limited working season, repeated damages due to landslides, natural calamities i.e. flash floods and cloud burst, non allocation of stone/sand quarries by the State Governments, weak geological strata especially in North- Eastern region causing sinking/formation breaches and insurgency affected areas contribute to difficulties faced by BRO in maintenance of existing roads.

The Committee acquiesce with all these problems brought out by the Ministry yet they feel that the maxim ‘there is light at the end of the tunnel’ is still pragmatic to support BRO. They recommend the Ministry to dwell upon each of these problems separately and liaise with Central/State Governments to obviate as many of these difficulties like clearances, insurgencies, shortage of rock/construction material etc. As a long-term strategy, BRO in unison with all the stakeholders chalk out a strategy where dependence on state-of-the art heavy construction equipment is increased and the dependence on traditional labour force is reduced. This issue is further discussed in the next paragraph.

22. During deliberations on Demands for Grants of the Ministry of Defence for the year 2020-21, a representative of the Ministry of Defence candidly admitted that the delays are mostly because of forest clearance and land acquisition and land being a State subject adds to the difficulties. He further submitted that all the National Green Tribunal (NGT) norms are being followed

186 by BRO wherever it is undertaking construction. The Committee have learnt that measures such as establishment of single window system at District, State and Ministry of Environment and Forest (MoEF) levels to fast track processing of forest clearance cases, adoption of simplified and unified proforma for processing of both forest and wildlife clearance simultaneously and constitution of a Working Group by Ministry of Environment, Forest and Climate Change (MoEF&CC) under the Chairmanship of Secretary, MoEF&CC to review the forest clearance cases have been adopted for quick and time bound disposal of forest clearance cases by the Ministry. In addition, the MoEF&CC vide letter dated 4th July, 2014 has accorded general approval under Section (2) of the Forest (Conservation) Act, 1980 for diversion of forest land in the state of Arunachal Pradesh, Himachal Pradesh, Uttarakhand and Sikkim, as per details given below :-

(a) Construction and widening of two lane roads by the BRO and other road construction agencies entrusted with the job by the Ministry of Defence, in the area falling within 100 kilometer aerial distance from the Line of Actual Control;

(c) In addition to above, MoEF&CC vide letter dated 4th July, 2014 has accorded relaxation for diversion of forest land, for non forest purpose- special provision for creation of compensatory Afforestation, in lieu of forest land diverted for creation of strategic defence projects being taken up within 100 km aerial distance from the Line of Actual Control by any user agency identified by the Ministry of Defence.

It would not be out of place to add and recommend here that if required, more stakeholders, including that of concerned State Government and private

187 suppliers, be included to give effect to the work of BRO. The Committee would like to know that how many meetings have so far been held by the Working Group along with the outcome of such meetings.

23. The Committee note the measures taken or being implemented by the Ministry of Defence for quick and time bound disposal of forest clearance cases by the Ministry of Environment, Forest and Climate change and specifically recommend that as this issue is inextricably linked to national security, NGT/environmental norms should not be an impediment for roads/infrastructure creation and maintenance within 10-15 kilometer of area around the borders.

24. The Committee are pleased to note that new technology such as use of Geo Textiles in pavement construction and cementitious base for construction of pavements is being used by BRO to reduce the carbon footprint. They recommend that new steps should be further taken in this direction of environment conservation and the Committee be apprised accordingly.

25. The Committee have been given to understand that in order to facilitate the maintenance of existing roads, Director General Border Roads (DGBR) has been delegated powers to fix/revise the rates for maintenance and snow clearance grants for roads entrusted to BRO for maintenance and outsource maintenance of roads. The following measures have been taken to overcome the various impediments and to expedite the construction of roads in the border areas:-

 Guidelines for preparation of Annual Works Plan (AWP) and Annual Procurement Plan (APP): In order to prioritize the Annual Works Plan and to make it more realistic with reference to the budget availability, new policy guidelines for preparation of AWP and APP have been issued.  Enhanced Delegation of Administrative and Financial Powers: The main objective of enhanced delegation of powers right upto the level of Chief Engineer and Task Force Commander is to bring transformational changes in the organization in order to improve the pace of execution of works to

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meet the requirement of the Armed Forces and to avoid delays on account of references between the Chief Engineer and HQ DGBR and also between HQ DGBR and MoD.  Engineering Procurement Construction (EPC) Mode of execution: In order to enhance the capacity of BRO and to ensure the completion of various road projects in the border areas as per the requirement of the Army, guidelines for adoption of EPC mode of execution have been issued by the Ministry, so that BRO is able to outsource road projects to big companies.  State Governments of Sikkim, Arunachal Pradesh, J&K, Himachal Pradesh and Tripura have constituted the Empowered Committee to resolve the various issues of BRO.

26. Emphasizing that prime focus of BRO should be on building roads in the difficult areas for which it was formed, the Committee sincerely hope that measures, as stated in the preceding paragraphs, being taken by the Ministry of Defence to improve the functioning of BRO yield results at the earliest.

Manpower strength

27. The Committee observe that against the authorized strength of 2426 Officers and 39174 subordinates, the existing force level in BRO is 1791 Officers and 31718 subordinates. They have been apprised that due to the change in construction philosophy from departmental construction to Engineering Procurement Construction (EPC) mode of execution, against the authorization of 41600 posts, 9082 posts are required to be rationalized pertaining to 11 non-core positions in a phased manner. Further, 1655 vacancies have been advertised and the recruitment is under process in phased manner at General Reserve Engineer Force (GREF) Centre and demand for 2046 vacancies for different posts to Staff Selection Commission (SSC) for the year 2019 have been placed and 118 vacancies against compassionate appointment is also under process. The Committee opine that availability of skilled and adequate manpower is essential for undertaking construction and maintenance of roads in difficult and rough terrains. Therefore, the Committee

189 desire recruitment for 1655 and 2046 vacancies be expedited and they be apprised within three months of the presentation of the Report. They further desire that exact details of authorized and existing technical, both Officers and subordinates, and administrative/secretarial manpower in BRO may be intimated at the earliest.

INDIAN COAST GUARD

Budget 2020-21 and Force Level in Indian Coast Guard

28. The Committee note that for the fiscal year 2020-21, while the Indian Coast Guard (ICG) projected a requirement of ₹ 5350.00 crore, ₹ 2500.00 crore have been allocated under the Capital Head i.e. 53.27 per cent of the projected amount. Similarly, under the Revenue Head, while the Budget Estimates (BE) projection for the year 2020-21 was ₹ 3246.03 crore, the allocation has been ₹ 2532.76 crore. In total, while the ICG projected a requirement of ₹ 8596.03 crore, the allocation has been ₹ 5032.76 crore. As on 31st December, 2019, the Coast Guard has spent ₹ 3632.23 crore out of ₹ 5076.07 crore allocated at Revised Estimates 2019-20. The Committee have also been apprised that for facilitation of timely materialization of targeted force level in Coast Guard, 25 Ships and 20 Boats are under construction at various shipyards, 16 Advanced Light Helicopters are scheduled for delivery commencing March 2020, procurement of 30mm 74 Naval Surface Guns (NSG) is under progress and Acceptance of Necessity (AoN) for 12 Twin Engine Heavy Helicopters has been accorded by the Government.

29. The Committee, while taking note of the fact that Indian Coast Guard has a peace time charter, appreciate the myriad roles and responsibilities undertaken by the Coast Guard which include safety and protection of artificial islands and offshore terminals, protection of fishermen and providing assistance to them during distress at sea, preservation and protection of marine environment, assisting the Customs and other enforcement agencies in

190 anti-smuggling operations, safety of life and property from natural or man- made disasters at sea and collection of meteorological and oceanographic data for use by the scientific fraternity. Besides, ICG also provides coastal security in territorial waters in coordination with Central and State agencies and it is the Lead Intelligence Agency for coastal and sea borders.

30. While tendering evidence before the Committee, the Director General, Indian Coast Guard submitted that the Coast Guard works for almost 14 Ministries and on an average, 50 ships are deployed at sea every day. Further, funds are required for maintenance of ship and aircraft, fuel and related expenses. The Defence Secretary also highlighted the need to strengthen the Coast Guard keeping in view expanding area of ‘blue economy’ i.e. maximum exploitation of sea resources. As regard to budget utilization by the Coast Guard, the Committee take note of the deposition of the Secretary (Defence Finance) that the Ministry of Finance did not agree to give any additional money to the Coast Guard at the Revised Estimates stage because their pace of expenditure was very slow. Additionally, a limit of spending only 25 percent of the allocated budget in the last quarter of a Financial Year has been imposed by the Ministry of Finance. Keeping in view the significant multifarious tasks performed by the Indian Coast Guard and planned procurement/construction of ship, aircraft and Advanced Light Helicopters for achievement of targeted force level, the Committee recommend that funds allocated to the Indian Coast Guard should be suitably augmented at Revised Estimates or Supplementary Grants stage. The Committee would also recommend that the Indian Coast Guard should improve their trend of utilization of budget according to prescribed timelines and manner. They would also like to be apprised of the reasons in sequence as why the amount could not be fully utilized by the Coast Guard, at least to know whether this under-utilisation could be due to some extraneous circumstances also.

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Required and existing manpower

31. The Committee note that at present, total manpower strength with Coast Guard is 14,313 comprising of 1982 officers, 10997 Enrolled Personnel and 1334 Civilians. Admittedly, proactive steps such as re-employment of Naval Short Service Commissioned officers at Comdt (JG) rank, deputation of officers from Indian Navy, induction of Commercial Pilot (CPL) holders as pilots under Short Service Appointment (SSA) scheme, introduction of Short Service Appointment (SSA) Lady Officers Entry Scheme, online applications for recruitment of officers and enrolled personnel, audio visual and print advertisements for publicity to generate awareness amongst general masses, undertaking preliminary selection at 06 different locations in respect of Officers to garner maximum candidates, recruitment of Enrolled personnel from all over country by deputing selection committees at various places, special recruitment drive for induction of SC/ST candidates, lectures being conducted at various Schools/ Colleges to create awareness amongst youth for joining Coast Guard and creation of separate Coast Guard website for ease of processing online application forms, have been taken towards liquidation of manpower shortage against sanctioned strength. The Committee opine that adequate manpower strength is essential for meeting challenges of maritime security and various contingencies in sea and coastal areas of the country. Therefore, they recommend that concrete and result-oriented efforts should be made by the Ministry of Defence in order to strictly adhere to the time line of 2-3 years envisaged towards liquidation of shortage against sanctioned manpower in the Coast Guard. They would like to be apprised of the progress every six months the objective set is accomplished.

Indian Coast Guard Academy

32. The Committee have been apprised that Indian Coast Guard (ICG) Academy is envisaged to cater for the professional training of personnel on subjects specific to Coast Guard’s non-military charter of duties. The proposed academy is planned to cater for the training of 650 trainees, including the

192 training needs of personnel from other maritime stakeholders including Navy, Border Security Force (water wing), Marine Police and friendly foreign countries as part of International Cooperation. Approval-in-principle (AIP) for acquisition of 160 acres land at New Mangalore for setting up of ICG Academy has been accorded by Ministry of Defence on 26th November, 2019. Presently, Board of Officers has been convened for acquisition of land. Construction and commissioning of the Academy is planned in 2022-25. In this regard, the Committee recommend that the Ministry should extend all budgetary and infrastructural support for completion of the Academy within the envisaged timeframe. On their part, the Coast Guard should also mull a foolproof strategy to cooperate with the Ministry so that the Academy is commissioned within the envisaged timelines.

MILITARY ENGINEER SERVICES (MES)

Budgetary Provisions and challenges

33. The Committee learn that as on 31st January, 2020, Military Engineer Services (MES) has been able to spend 80.71 percent of the allocated Capital budget and 75.28 percent of the allocated revenue Budget for the Financial Year 2019-20. MES has projected an amount of ₹ 23,938.91 crore for the Financial Year 2020-21. The Committee have further learnt that to mitigate effects of the reduced allocation, if any, at Budget Estimates (BE) stage, Annual Major Works Programme (AMWP) ceilings for both Army and Air Force have been reduced, probable dates of completion accorded for delayed projects have been extended and certain sanctioned works have been re-appropriated/ foreclosed/ cancelled. Further, 25 works of Army worth ₹ 1049.69 crore, 16 works of Air force worth ₹ 144.96 crore and 11 works of Navy worth ₹ 56.03 crore were foreclosed/ cancelled (including under process for cancellation/ foreclosure) due to shortage of funds in last three financial years. The Committee understand that MES, comprising of proficient personnel who are deployed across the length and breadth of the country at remote locations in all types of terrain and inhospitable climatic conditions, plays an important role in

193 empowering the combat effectiveness of the Armed Forces besides providing engineering support to various formations for Army, Air Force, Navy, Coast Guard, Ordnance Factories and Defence Research and Development Organisation (DRDO). Therefore, they recommend that sufficient funds should be allocated to MES at Revised Estimates or Supplementary Grants stage so that MES is able to effectively fulfill its responsibility for creating the strategic and the operational infrastructure for the Forces.

Initiatives regarding MES

34. The Committee find that initiatives regarding MES such as revision in maintenance norms of buildings and roads, implementation of EPC methodology in MES, performance security in MES contracts, enhanced defect liability in MES contracts and Public Procurement (preference to ‘Make in India’) have been approved by the Ministry. Further, proposals regarding revision of Defence Works Procedure 2007, revision of scales of accommodation for Defence Services 2009, bulk MES establishment sanction, revision of plinth area conversion factor and electricity tariff for Armed Forces at par with civil domestic consumption are under process with the Ministry of Defence. The Committee recommend that initiatives regarding MES which are approved by the Ministry be swiftly implemented and they be apprised accordingly. They also recommend that decision on proposals under consideration in the Ministry be taken at the earliest to reach finality in order to aid MES in timely achievement of its targets and clientele satisfaction. The Committee further recommend that MES should make maximum use of ‘Government e-Market Place (GeM)’ portal for procurement and e-payments method should also be implemented to the fullest.

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DIRECTORATE GENERAL DEFENCE ESTATES

Budgetary provision

35. The Committee have been apprised that as against the projected amount of ₹ 1,61,117.93 lakh under Revenue Head in Budget Estimates 2020-21 for Defence Estates Organisation (DEO), ₹ 38,742.00 lakh have been allocated, i.e. a shortfall of ₹ 1,22,375.93 lakh. Under Capital Head, ₹ 994 lakh have been allocated against the projected amount of ₹ 2,425.19 lakh, i.e. a shortfall of ₹ 1,431.19 lakh. The Committee note that processing proposals for acquisition of lands, resettlement and rehabilitation of displaced persons and for hiring and requisitioning of lands and buildings, besides management of defence lands, are some of the responsibilities of Directorate General Defence Estates (DGDE). As custodian of defence land records, Defence Estates Organisation is involved in updation and maintenance of records alongwith implementation of Cantonments Act 2006, Policies, Rules and Regulations and executive instructions. Therefore, they recommend that additional funds commensurate with pace of expenditure and prioritization of critical works should be allocated to the DEO at Revised Estimates stage.

While recommending for additional funds, the Committee would like to know what compromises are likely to be made in case the Supplementary funds do not reach to the level as sought in the initial projected figures. During deliberations on Cantonment Boards, the Committee took note of the fact that to accommodate the changing needs it would be in the fitness of things if the Ministry take a serious note and contemplate for amending Cantonment Board Act 2006 with a fresh perspective. In such proposed amendment, heed should be paid to increase the construction areas of the properties coming under the purview of the Cantonment Boards.

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Encroachment of Defence Lands

36. The Committee have learnt that the total area of defence land under the management of Defence Estates Organisation (DEO) is 70,922 acres. As on 31.12.2019, about 4458 acres of Defence Land under the management of DEO is under encroachment. The Committee find during examination of Demands for Grants 2019-20, that about 4505 acres of Defence Land under the management of DEO was under encroachment as on 30.06.2019. The Committee have been given to understand that the Ministry of Defence has already put in place a system whereby information of encroachments on defence land is received periodically and action taken thereon is monitored. The following institutional mechanisms are in place:-

(a) Each Service and Defence Establishment under whose management the defence land is placed, is responsible for prevention and removal of encroachments.

(b) An annual certificate is obtained from the Station Commander or the Defence Estates Officer under whose management the land is placed, as the case may be, under the provisions of Rule 14 of ACR Rules, 1944 or Rule 13 of Cantonment Land Administration Rules (CLAR), 1937 which provides information on physical verification of land and unauthorized constructions or encroachments thereon. This enables the concerned defence authorities to take stock of illegal or unauthorized occupation and monitor action taken by field officers.

(c) A quarterly report on prevention and removal of encroachments is obtained by HQ of each Service/Defence Establishment which is received by the Ministry of Defence and action taken is monitored.

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(d) The officers at the field level under each Service or Defence Establishment have been notified as ‘Estate Officer’ under Rule-3 of the provisions of the Public Premises (Eviction of Unauthorized Occupants) Act, 1971 who are responsible for taking necessary action to deal with unauthorized occupation, unauthorized constructions and encroachments on Defence land placed within their jurisdiction.

(e) Demarcation survey of entire defence land outside Cantonments and inside Cantonments have already been undertaken in order to enable the concerned authorities to reconcile the recorded land data with the physical occupation of land and also to ascertain if there are any encroachments on defence land. The survey report is submitted to the Directorate General Defence Estates.

(f) Computerization of defence land records and digitization of important land files and documents have been done for efficient management of records and taking timely action against encroachments.

(g) A committee under the chairmanship of Additional Secretary, Ministry of Defence periodically reviews action taken on removal of encroachments and also suggests ways and means to make the system more efficient from time to time.

37. The Committee note the steps mentioned above by the Ministry to remove encroachments on defence lands, however, it is a matter of concern that inspite of these mechanisms in place the area of defence land under encroachment has not substantially decreased. Therefore, they recommend that urgent and productive measures should be put in place for eviction of encroachment on the defence lands. The Committee, while examining this subject earlier, also took note of the fact that one of the reasons for

197 encroachments were ongoing civil cases in various courts. The Committee fully understand such a scenario but would still urge the Ministry to find and devise a foolproof mechanism where at least the future encroachments could be checked forthwith. The Committee would like to know about the planned measures in this area in addition to the ones already brought out above.

Expert Committee on Working of Cantonment Boards

38. The Committee take note of the fact that an expert committee under the Chairmanship of Shri Sumit Bose, IAS (Retd.) had been constituted to address various issues relating to the working of Cantonments such as renewal/extension of expired/expiring leases, Building Bye Laws and Floor Space Index, transfer and mutation of Old Grant properties, freehold, service charges payable to Cantonments etc. The Terms of Reference of the committee are as below:

i. To study the existing Cantonment Act and to make specific recommendations for suitably amending the Act to impart modernization and democratization of the governance structure of Cantonment Boards. ii. To make specific recommendations in connection with building bye- laws in Cantonments to align them with the best practices and create an incentive structure particularly with respect to energy efficiency, green building, water conservation/rain water harvesting, fire safety standards, disaster resilience, sanitation including zero liquid discharge, etc. and initiation of on-line clearances of building norms. iii. To review the existing Floor Space Index (FSI) across Cantonments and make recommendations on future rationalization. iv. To make recommendations on the procedural modalities for transfer and mutation of property, including Old Grants Bungalows; freehold and leasing of property including its extension etc.

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v. To make recommendations in respect of municipal services being provided to the residents of the Cantonment, incorporating e- Governance practices and also providing ‘Smart Solutions’ in respect of sewerage and drainage system, water supply, citizen safety, clean environment etc. vi. To make recommendations on levy of Service charges by Cantonment Boards from all entities. vii. To make recommendations after review of orders relating to Cantonment administration, so as to weed out such orders that are out of date.

39. The Committee have been apprised that the expert committee has submitted its report to the Ministry of Defence on 13.02.2019. The Committee are hopeful that prompt implementation of such propitious recommendations of the expert committee would lead to desired modernization and democratization of the governance structure of Cantonment Boards alongwith providing solutions to the various challenges faced by the civilian population residing in Cantonment areas. They desire that latest status of implementation of the report of the Bose Committee may be furnished within one month of the presentation of this Report.

Implementation of Central Government Schemes in Cantonment Boards

40. The Committee have learnt that the Centrally Sponsored Schemes such as Smart Cities Mission, AMRUT, etc. are to be implemented by the State Governments/UTs in their respective areas of jurisdiction. Barring isolated cases, these Schemes are not being implemented by the State Government/District/State Municipal authorities in the Cantonment areas which are co-located with the city and form part of the common environment. The main reason for non-implementation is that the Cantonment Boards are perceived by the State Government as a separate entity from State Urban Local Bodies (ULBs). Since the entire Cantonment area in a city is considered to be

199 directly under the administrative jurisdiction of the Central Government and not under the State Government, therefore, the Cantonment areas are left out by the State Government authorities at the time of assessment of projects by the State Mission Directorates, on the ground that the State Government is not liable to bear any expenditure in the implementation of Centrally Sponsored Schemes in Cantonment areas.

41. The Committee have been apprised that the Ministry of Defence has taken up the matter with the Chief Secretaries of all concerned State Governments vide its letter dated 05.11.2019 to issue suitable instructions to institutionalize implementation of Centrally sponsored schemes in Cantonment areas and the Directorates are further pursuing the matter with the State Governments. The Committee understand that Cantonment Boards, under the provisions of sub-section (2) of section 10 of the Cantonments Act, 2006, are deemed municipalities under clause (e) of Article 243P of the Constitution, for the purposes of receiving grants and allocations and implementing Central Government schemes relating to development of infrastructure and social welfare. Therefore, the Committee recommend that the Ministry should leave no stone unturned in convincing the State Governments for implementation of Centrally sponsored schemes in Cantonment areas. Further, proposal to convert civil areas of Cantonments into municipalities may be examined seriously, without compromising with military interest, civil aspirations and State Government’s perspective.

Leased properties in Cantonment areas

42. The Committee found that Cantonments were set up primarily to quarter troops that necessitated provision of civic amenities such as houses, shops, schools, cinemas, clubs, banks etc. Certain land was, therefore, allotted on lease for such purposes under the provisions of Cantonment Codes of 1899 and 1912 and Cantonment Land Administration Rules (CLAR) of 1925 and 1937.

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Leases were granted for various tenures on payment of appropriate premium and annual rent. Some of these leases were granted in perpetuity and fixed tenures while others were renewable. Such sites are placed under the management of Cantonment Boards and Defence Estates Officers. There are total 6556 leased sites.

43. On the issue of commercial use of leased properties in Cantonment areas, the Director General, Defence Estates informed the Committee that renewal in such cases is being done subject to some conditions. The Committee, on the issue of feasibility of extension of lease period for residential purposes in Cantonment Areas, have been apprised that where the lease policy has been expired, the interim policy of March 2017, which was extended up to December 2019, is in effect. The Committee recommend that with a view to providing permanent solutions to various constraints faced by civilian population residing in Cantonment areas, the permanent lease policy which is in final stages of approval sees the light of the day without further loss of time. Timely implementation of the new lease policy also includes mutation issues and as such the Committee feel that it should be finalized and notified at the earliest available opportunity which will not only streamline the working of DGDE but would also earn public trust and credence.

Commercial use of non-sensitive Defence lands

44. The Committee have been intimated that with regard to the option of commercialization of non-sensitive defence lands, such as leasing lands to commercial establishment etc. to increase the source of revenue, very limited vacant Class – C defence land is available for this purpose with Cantonment Boards. Also funds for establishing such capital assets are also not available. Cantonment Boards could consider projects on B-4 vacant lands for projects which could generate revenue for Cantonment Boards such as community halls, office complex etc. This would also involve process of reclassification of B-4 lands to C for municipal purpose by the MoD. The proposal, if considered

201 feasible, could be considered for sanction under Creation of Capital Assets. The Ministry has advised the Cantonment Boards accordingly since this is almost identical demand from all the Cantonments.

45. The Committee opine that in addition to above mentioned proposals, the Ministry of Defence may also look into making the land available with Defence, Cantonment boards and Ordnance Factories to the State Governments for construction of helipads or parking space as it would lead to substantial revenue generation, which in turn can be used for providing better public infrastructure, health and educational facilities etc. in the Cantonment areas. The Committee recommend that feasibility of the said proposals may be examined at the earliest and they be apprised accordingly.

Interests of the Civil Population in Cantonment Areas

46. During deliberations on Demands for Grants 2020-21, the Committee had raised the issue of problems being faced by the dwellers in Cantonment areas in matters related to improvement of building condition such as repair of house etc. The Committee are pleased to note the submission of the Director General, Defence Estates that all the minor works such as repair works, whitewashing, replacement of roof, etc. have been allowed now without any formal permission to be given by the Cantonment Board.

47. The Committee also raised the issue of construction of roads in Cantonment areas. In this regard, the Defence Secretary apprised the Committee that highest priority in such cases is accorded to the requirements of Armed Forces and security considerations. Wherever land is not available due to requirements of Armed Forces and security considerations, exchange of equal value land or equal value cost is considered. A Geographic Information System (GIS) is being put in place to streamline the whole process so that the information regarding available land is available to the State Governments. The Committee appreciate various steps being taken in the direction of relaxing rigid norms regarding issues related to civilian population in the Cantonment

202 areas and recommend that more such steps be contemplated/implemented to build mutual faith and affinity between the civil society and the Forces.

Ammunition Dumps

48. The Committee, during their deliberations in connection with examination of Demands for Grants 2019-20, had expressed concern over the hazards posed by the ammunition dumps in vicinity or amidst the inhabited areas of the country. During discussion on Demands for Grants 2020-21 too, the Committee raised the issue of limitations/restrictions faced by the civilians dwelling near Army depots. In his deposition before the Committee, the Chief of Defence Staff submitted that permission for residential purposes is given to civilians within 50 yards of Army accommodation. Around the ammunition depots, rule of no construction within 1000 meter, as recommended by the explosive experts, is enforced. The Committee note with glee that efforts are on for underground vertical storage of the ammunitions in order to modernize the Depots and provide relaxation to the civilians residing around the Depots. While adopting best advancements in the field and also with the intention to give respite to the surging civil population, the Committee strongly recommend that a final decision is arrived in this regard at the earliest. Such a solution should not only cover Jammu Cantonment but also the lands affected thereto. The Committee would like to be apprised of the results in this regard within three months of the presentation of this Report.

DEFENCE PUBLIC SECTOR UNDERTAKINGS (DPSUS)

Time slippages in delivery of products

49. The Committee have been given to understand that there have been slippages on the part of DPSUs in adhering to the delivery timelines while supplying items to the Forces. As learnt through the written submission of the Ministry, the dependence of HAL products, being highly technology intensive, on multiple stakeholders including foreign Original Equipment Manufacturers

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(OEMs) in most of the cases, at times has posed unforeseen challenges. The US sanctions during Light Combat Aircraft (LCA) Tejas development which in turn led to delay in certification of the aircraft, delay in receipt of Licence Technical Documents (LTD) from Licensor in case of Su-30MKI manufacturing etc, are few such instances.

In case of Bharat Electronics Limited (BEL), the on-time delivery during last 5 years is around 80 percent, however, some of the large complex projects get delayed due to concurrent Engineering, accord of Bulk Production Clearance, change in user requirement, specifications to incorporate additional features, site/platform readiness etc. As regards Bharat Dynamics Limited (BDL), due to reasons beyond control, products like Konkurs-M Anti-Tank Guided Missile (ATGM), Invar Anti-Tank Guided Missile (ATGM) were delivered beyond scheduled time due to technical snag encountered during proof firings. Akash Weapon Systems were delivered beyond scheduled time due to delay in receipt of input materials from vendors and delay in receipt of Tatra Vehicles from M/s BEML due to embargo. In Garden Reach Shipbuilders and Engineers Ltd. (GRSE), the delays in warship construction are primarily on account of finalization of fit and freezing of specifications by the customer, failure of Major Equipment manufacturers and inability to progress Integrated Construction. In reference to Project P75 of Mazagon Dock Shipbuilders Limited (MDL), revision of delivery dates occurred due to delay in delivery of material, incomplete Technical Data Package Information System from collaborator, non-availability of concerned specialists as required from the collaborator / OEMs and delay in defect rectification and software issues. The Committee, during oral evidence of the representatives of the Ministry of Defence, were apprised that the DPSUs have first four contracts from Myanmar, and in two of them supplies have been made before time.

50. The Committee opine that majority of the reasons cited above such as change in user requirement, specifications to incorporate additional features, finalization of fit and freezing of specifications by the customer, incomplete

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Technical Data Package Information System, non-availability of concerned specialists as required from the collaborator / OEMs etc. from collaborator may be resolved by thorough and timely interaction of the DPSUs with concerned collaborators/OEMs/vendors/clients/users. The Committee, therefore, recommend that the DPSUs should implement all suitable mechanisms to ensure timely supply of various defence products as delay due to any reason has consequences on operational readiness of the Forces. Here, it is in the fitness of things to recommend that highest level of due diligence should be taken by all Defence DPSUs in formulating a contract with the OEMs which should give an edge in the favour of DPSUs where in case of defaults, the financial interests of DPSUs are not put at stake.

Order Book Challenges and production in Defence Public Sector Undertakings (DPSUs)

51. After gleaning through the information supplied to the Committee, they note that out of the nine DPSUs, Hindustan Aeronautics Limited (HAL) , Bharat Dynamics Limited (BDL), Garden Reach Shipbuilders and Engineers Limited (GRSE) , Goa Shipyard Limited (GSL), Hindustan Shipyard Limited (HSL) and Mazagon Dock Shipbuilders Limited (MDL) are facing order book challenges and decline in production in the current/coming years. Although HAL’s production over last several years has been growing with highest turnover recorded in 2018-19, the major part of existing orders for supply of aircraft and helicopters will be liquidated shortly with the major manufacturing order of Su- 30MKI being completed in 2019-20. There is no firm order currently available on the company beyond 2021-22. In case of BDL, most of the major products like Akash Weapon system will be executed by 2019-20, Invar ATGM and Konkurs-M ATGM will be executed by 2020-21. There are no firm order executable beyond year 2020-21. In case of Garden Reach Shipbuilders and Engineers Ltd. (GRSE), 3 projects of Indian Navy and Coast Guard will get completed in next 3 to 4 months leaving the shipyard with 3 No. of projects of Indian Navy for construction of 15 ships against capacity of construction of 20 ships. Goa

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Shipyard Limited (GSL) is presently executing the 05 Coast Guard Offshore Patrol Vessel (CGOPV) project with balance executable order book of ₹ 800 crore which would get liquidated by 2020-21. The balance order book value of HSL is ₹ 2772.28 crore as on 31 December, 2019 and the balance orders are likely to be completed by end of March 2022.

52. The Committee have also been apprised that for HAL, orders for supply of 83 Light Combat Aircraft (LCA) Mk1A and 15 Light Combat Helicopter (LCH) are expected for which quotations have already been submitted. An additional order for 12 Su-30MKI is also expected in the near future. The LCH platform has attained Initial Operational Clearance for both Air Force and Army variants and is fully ready for operational induction awaiting orders. Similarly, Light Utility Helicopter (LUH) has also completed all major tests, including H-V envelope evaluation, towards Basic Operational Clearance of LUH. Documents towards Initial Operational Clearance (IOC) were submitted to User and Regional Centre of Military Airworthiness (RCMA) during December 2019 and IOC has been granted by Centre for Military Airworthiness and Certification (CEMILAC) to HAL on 7th February, 2020 during Defence Expo 2020 at Lucknow. HAL is also expecting additional orders for ongoing programs like Advanced Light Helicopter (ALH), LCA, Hawk, Do-228 and SU-30 MKI and fresh production orders for new platforms like Do-228 Civil variant, LCH, HTT 40, LUH and Hawk- i. Goa Shipyard Limited (GSL) is making concerted efforts to secure short gestation projects in Domestic, Export and Ship Repair segments which will help in minimizing the potential impact due to lean executable orders to bridge the gap till the significant Value of Production contribution from Frigates and Mine Counter Measure Vessel Projects. The financial restructuring proposal of HSL with NIL cash outflow to the Government of India to enable Shipyard to achieve positive net worth is under active consideration of the MoD, which will improve HSL’s credit rating. Mazagon Dock Shipbuilders Limited (MDL) has an in-house capacity to undertake simultaneous construction of 10 ships and 11 submarines at various build stages. Considering the status of ongoing

206 projects, MDL can immediately undertake construction of 4 more warships and 7 more submarines.

53. Keeping in view the above facts, the Committee are of the considered view that the existing infrastructure at DPSUs and skilled manpower would face the challenge of idling due to want of confirmed orders. The continuity in production orders from the Forces is essential to sustain production growth of the DPSUs. Therefore, they recommend that the orders for DPSUs in pipeline need to be expedited for optimum use of their construction and building capacities and manpower. They also recommend that the Ministry and DPSUs should explore options of venturing into commercialisation of various products other than arms and ammunition built by the DPSUs such as alloys by Mishra Dhatu Nigam Limited (MIDHANI) for revenue generation and business expansion.

Defence Exports

54. The Committee note that the value of exports from HAL in 2019-20 was ₹ 114.59 crore (upto 31.12.2019). The value of Defence exports in 2018-19 in BEL, BEML, BDL, GRSE, GSL and MIDHANI stands at ₹ 78.73 crore, ₹ 19 crore, ₹ 66 crore, ₹ 4.55 crore, ₹ 14.54 crore and ₹ 20 crore (expected), respectively. The strategies adopted to enhance BEML’s export business include widening BEML’s distributor network in addition to direct sales, brand building and visibility through exhibitions and seminars, collaboration with other DPSUs/ Indian companies, Joint Ventures in India or with local firms in abroad, utilizing Export-Import Bank opportunities through Indian Lines of Credit and exploring opportunities through Chambers of Commerce / Embassies / Defence Attaches. The steps taken by MIDHANI to improve exports are processing of National Aerospace and Defence Contractors Accreditation Program (NADCAP) certification to target global aerospace market, registration of MIDHANI as a Vendor in EGYPT Defence Production Unit - Helwan Engineering Industries Company and approval of MIDHANI as a global supplier for Turbo Charger

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Application (one of the important components in automobile industry). The steps taken by the Ministry of Defence to promote defence exports include setting up of export promotion cell, expansion of role of Defence Attaches and creation of export action plans and strategies for all DPSUs and Ordnance Factories Board (OFB). The Committee perceive that healthy exports are crucial for accrual of economic and strategic benefits to a country. The Committee note the above steps being taken to promote exports and recommend that concerted and productive efforts of all the stakeholders i.e. the Ministry of Defence, DPSUs, Indian Ordnance Factories, robust industrial production base, strong ecosystem of Research and Development with collaboration of premier research institutions are required to make our nation a leading exporter of Defence products. For this purpose, realistic targets of exports for each DPSU may be fixed by the Ministry for better planning and execution. They also desire that details of the value of exports by each DPSU for 2019-20 may be furnished to the Committee after the end of the financial year.

Reforms for indigenization and import substitution of products

55. The Committee have been apprised of the reforms undertaken by the Ministry of Defence for promoting indigenization in the DPSUs which inter alia include simplification of Make II procedure which involve prototype development of equipment/ system/ platform or their upgrades or their sub- systems/ sub-assembly/assemblies/ components, primarily for import substitution/innovative solutions, for which no Government funding will be provided for prototype development purposes, approval of 2521 items to be taken up for indigenization under Make II framework, consideration of ‘suo- motu’ proposals of Capital Acquisition by the Services, setting up Indigenization Fund in DPSUs/OFB, insertion of 10 percent points in Memorandum of Understanding of Defence PSUs for indigenization and notification of a new policy for indigenization of components and spares used in Defence Platforms with the objective to create an industry eco-system to enable indigenization of imported components (including alloys and special

208 materials) and sub-assemblies for Defence equipment and platforms manufactured in India in March 2019. Further, indigenization portal for DPSUs/OFB is being developed and study on savings in cost due to indigenization in the last 5 years in DPSUs/OFB is being taken up by Institute for Defence Studies and Analysis (IDSA), Delhi. New Policy for indigenization was notified by the Department of Defence Production on 8 March, 2019 with the objective to create an industry ecosystem. Some of the related issues touching the import substitution and ‘Make in India’ initiative have separately been discussed in the 7th Report of the Committee relating to Demands for Grants (2020-21).

56. The Committee understand that in HAL, the Greenfield facility planned for helicopters would cater to the manufacture of indigenously developed Light Utility Helicopter (LUH) program which will replace the ageing fleet of Cheetah/ Chetak helicopter produced under Transfer of Technology (ToT). Manufacture of state-of-the-art products like LCA, ALH, LCH, LUH, HTT-40 etc within the country helps avoid direct import to the extent of production by HAL thus furthering the import substitution efforts. Some of the major systems like Integrated Air Command and Control System (IACCS), Weapon Locating Radar (WLR), Cdr TI Sights, Tropo Upgrade, Integrated Communication System (ICS), Ground Based Mobile Elint System, Low Intensity Conflict Electronic Warfare System (LIC EWS), Electronic Voting Machines (EVM), Voter Verifiable Paper Audit Trail (VVPAT) etc., are indigenously designed and manufactured by BEL. Indigenization of products like Konkurs-M, Invar, Milan-2T has been achieved by BDL upto 97 percent, 78.6 percent and 71 percent respectively. Post modernisation of infrastructure in 2013, GRSE can undertake construction of 20 Nos. of ships (08 Large ships and 12 small ships) concurrently. On completion of ongoing infrastructure augmentation Plan for Mine Counter Measure Vessel (MCMV), GSL will have the capability to build high technology GRP hull MCMVs indigenously with help of foreign technology provider. The Submarine Launch Facility will facilitate launching of Submarines directly independent of

209 availability of deep dry dock and MDL shall not be dependent on Naval Dockyard or Dry Docks available with Mumbai Port Trust.

57. The Committee have been given to understand that it is estimated that Defence PSUs will reduce the import bill more than ₹ 15,000 crore by 2022 through indigenization of products and processes. Taking into account the fact that India is the second largest importer for Defence items in the world, the Committee recommend that urgent and concerted efforts for using our indigenous technology, knowledge and skill should be made by the Ministry and the DPSUs to cater to maximum requirements of our Defence Forces.

Level playing field for players participating in Defence production

58. The Committee, during their deliberations on DFG 2020-21, had raised the issue of availability of level playing field, at par with the DPSUs, to other private indigenous players participating in defence production. The Secretary, Defence Production, apprised the Committee in this regard that no favourable treatment is meted out to the DPSUs and they enter the competitive bidding for orders. The Committee are pleased to note that Indian Ordnance Factories and three DPSUs i.e. HAL, BEL and BDL are amongst the world’s top 100 Defecne production industries. Therefore, they recommend that to promote feeling of competitiveness and efficient functioning amongst indigenous Defence production sector, the information regarding achievement of our Indian DPSUs and allied organizations should be popularised through media and bulletins.

Corporate Social Responsibility (CSR) funding to Sainik Schools

59. The Committee recommend that under CSR initiatives, funds should also be provided to the Sainik Schools by the DPSUs keeping the national interests as paramount.

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CANTEEN STORES DEPARTMENT (CSD)

Budgetary Allocations

60. Canteen Stores Department (CSD), a Government of India Undertaking under the Union Ministry of Defence, is committed to welfare of troops of the Army, Navy and Air Force and their families, through easy access to quality products of daily use at less than market prices. The Committee note that against the projection of ₹ 22,240.10 crore in BE 2020-21, it has been allocated ₹ 20,100.38 crore, leaving a gap of ₹ 2,139.72 crore. They have also been apprised that 50 percent of the Trade Surplus generated by Canteen Stores Department goes to Consolidated Fund of India. From the deliberation on the Demands for Grants 2020-21, the Committee find that the additional funds are required to support CSD in meeting the contractual obligation of current Financial Year, automation of CSD to ensure full spectrum visibility in supply chain management and accounting/payments, modernisation of existing warehouses for which ₹ 138 crore have been projected to the Ministry of Defence and making up of critical shortfall of manpower. The Committee, therefore, recommend that the Ministry may consider making CSD a subordinate organization under the Ministry of Defence with powers to raise funds if and when required. Further, as an interim measure, one time grant may be given to CSD to sustain its operations and subsequently it could become a self- sustaining entity. The benefits like lower rate of GST should continue with the new entity also. Any surplus generated by the CSD could be distributed as per the current procedure in place.

Online presence of CSD 61. The Committee have learnt that following efforts are being made by the Ministry for commencing online services of CSD:  Process underway with regard to automation of CSD;  Preparation of Request for Proposal and scope of work likely to be completed by mid-March 2020;

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 Developmental Phase (linking of Two major Unit Run Canteens with Depots at Mumbai and Delhi by end of September, 2020; and  Feasibility of E-Commerce/Online Services will be looked into post automation.

The General Manager, CSD, in his oral deposition, apprised the Committee that online shopping will be having a mix of both home delivery as well as delivery to the depots. There are a few areas where home delivery is not feasible such as Jammu and Kashmir, 3 Corps, 4 Corps, 15 Corps and 16 Corps and there are certain restrictions in the Cantonment areas. He assured the Committee that 60 per cent clientele i.e. the veterans will be satisfied the moment online automation happens by September or October.

While appreciating the efforts made so far, the Committee still feel that the CSD should intensify its efforts to meet the timelines of commencing online automation by September or October of this year and ensure foolproof delivery mechanism to the Ex-Servicemen.

Manpower strength

62. During the discussion on DFG 2020-21, the issue of manpower shortage in CSD was brought up. The General Manager, CSD, in this regard, submitted that the Data Entry Operators have been hired through a proper outsourcing procedure, however, permanency in the arena of invoicing, accounting and Financial Department in the depots is desired. There is attrition of staff who have joined through the State Service Commission and recruitment of new staff takes its own time. The Ex-Army personnel are also employed through SSC. It was further submitted that more manpower will not be required once the automation of CSD starts. The Committee opine that ad hoc mechanism of hiring the staff through outsourcing is not a long term solution for shortage of manpower in CSD.

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Therefore, they recommend that the Ministry should put in systemic efforts to recruit permanent staff for CSD to improve efficiency of the organization. The Committee also suggest that the surplus staff of other Departments which falls under the purview of the Ministry of Defence should also be suitably utilized in Canteen Stores Department.

Qualitative requirements for opening Unit run Canteens in an area

63. The Committee note that the Qualitative requirements for opening a new Unit Run Canteen (URC) in an area include minimum posted strength of 100 personnel of the combatants i.e. serving personnel whether Army, Navy, Air Force, Assam Rifles etc. or 5000 Ex-Servicemen. However, being just a guideline, this criteria is not being strictly followed. Further, demands of the Forces and Ex-Servicemen are being met though mobile canteens or opening new canteens. The Committee, in this regard, would like to be apprised of the details of the proposals of opening new canteens received by the CSD in the last three years and action taken thereupon within one month of the presentation of this Report. They would also like to be intimated of the details of the mobile canteens and the areas and products serviced by them.

Use of technology

64. The Committee, during the deliberations, were appreciative of increasing use of various modes of digital payments. However, the Committee recommend that extensive use of technology such as central warehousing system for Depots and Unit Run Canteens and promotion of digital transaction should be undertaken by the CSD to modernize its retailing arrangements.

The Committee are mindful of the fact that this is an evolving era where use of technology is at its peak. There is no field of supply chain management like the CSD where the use of technology is of lower importance. As such, CSD

213 should also keep themselves abreast with the evolving international trends in such transactions and come out with a rendition to support their services to our highly esteemed Armed Forces.

WELFARE OF EX-SERVICEMEN

Resettlement Opportunities

65. The Committee learn that Department of Ex-servicemen Welfare (ESW) formulates various policies and programmes for the welfare and resettlement of ESM in the country. This Department has two Divisions viz., the resettlement Division and the Pension Division and has 3 attached offices namely Secretariat of Kendriya Sainik Board (KSB), Directorate General of Resettlement (DGR) and Ex-servicemen Contributory Health Scheme (ECHS) Organisation. Welfare of the Ex-Servicemen and their dependents is the joint responsibility of the Centre and the States / UTs. Like the Kendriya Sainik Board at the Centre, the Rajya / Zila Sainik Boards are responsible for policy formulation and implementation of resettlement and welfare schemes for Ex- Servicemen, widows and their dependents residing in their respective States/UTs/ Districts. There are 33 Rajya Sainik Boards and 403 Zila Sainik Boards in the country to assist the Central Government in this regard.

Budgetary provisions 66. During the course of the examination of the Demands for Grants 2020-21, the Secretary, Kendriya Sainik Board (KSB) highlighted the need for allocation of additional funds to KSB. He also submitted that lack of funds would lead to difficulties in payments for the salary of the employees of the Rajya / Zila Sainik Boards, Sainik Rest Houses, etc. The additional funds are also required for Armed Forces Flag Day and various welfare schemes. The Committee, in this regard, recommend that funds allocated to KSB should be accordingly increased at Revised Estimates stage in order to ensure that no financial

214 liabilities are pending and various welfare activities for Ex-Servicemen, widows and their dependents are unhampered.

67. During his deposition before the Committee, the Secretary, KSB also submitted that the meeting of the Rajya Sainik Boards in some of the States in the South Zone has not been held in the last 10 years. In this regard, the Committee recommend that the Ministry should seriously review the reasons for regular meetings of the Kendriya and Rajya/Zila Sainik Boards not being held, devise appropriate action plan in this regard and apprise the Committee accordingly.

Re-settlement of Ex-Servicemen 68. The Committee note that various opportunities/schemes are available for the retired Officers and Personnel Below Officers Rank (PBOR) for their resettlement which include reservation in Central/State Government Ministries/Departments, Public Sector Banks/Financial Institutions and Central Public Sector Undertakings. Directorate General Resettlement (DGR) also sponsors Ex-Servicemen (Officers) to various Government organizations, Public Sector Undertakings, Corporate Houses, Private Sector, Central Para Military Forces etc. based on their requisition for re-employment of ESM. The DGR empanels / sponsors ESM run Private Security Agencies, and State ESM Corporations for providing security guards to various CPSUs, Corporate Houses and Private Sector Undertakings etc. The other avenues for resettlement of ESM are ESM Coal Loading and Transportation Scheme, Management of Company Owned Company Operated Retail Outlets, Management of CNG Stations by ESM(O) in NCR/Pune, Allotment of Mother Dairy Milk Booths and Fruit and Vegetable (Safal) Shops in NCR, Coal Tipper Attachment Scheme, Tipper Attachment Scheme for Widows and Disabled Soldiers/ Dependents, Issue of DGR Eligibility Certificate for Allotment of LPG/Retail Outlet (Petrol/Diesel) Distributorship advertised by Oil Marketing

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Companies against 8 percent Reservation Quota, Retail Outlet Dealership (Petrol/Diesel) and holding of Ex-Servicemen Seminar cum Job Fairs.

69. The Committee further note that new proposals such as provision of technical service by ESM Manpower/ Agencies Sponsored by DGR, Women Centric {(ESM (W)} schemes/ initiatives of Hospital Administration and Office- cum-House Keeping and Maintenance are being contemplated by the DGR for the resettlement of Ex-Servicemen. The Committee are of the considered view that while in service, various financial and medical benefits are provided to the personnel and after retirement too, the needs, re-settlement and welfare of the Ex-Servicemen/women should be accorded the highest priority. Therefore, they recommend that the new proposals for resettlement of ESM/ESM(W) should be implemented at the earliest and the Committee be apprised accordingly.

Payment of ex-gratia amount to the dependents of martyrs

70. During deliberations on DFG 2020-21, the Committee find that the States are following their own policy while paying ex-gratia amount to the dependents of martyrs. A representative of the Ministry submiited beofre the Committee that the Ministry has communicated several times to the States for enhancing this amount. The Committee opine that maximum financial support should be extended to the families of those who sacrifice their life for the country . Hence, they recommend that the Ministry should intensify its efforts for persuading the highest authorities in the State governments for bringing uniformity in payments of ex-gratia amount to the dependents of martyrs.

Other welfare issues

71. The Committee recommend that the Ministry should look into the issue of maintaining uniformity across the country while providing exemption on toll tax to the Gallantry Award winners. They also recommend that educational and

216 awareness programmes for the serving and retired personnel of the Forces, regarding the benefits/facilities extended to them, should regularly be conducted by the Ministry to avoid their exploitation at the hands of unscrupulous persons.

72. The Committee find that basic aim of constructing a Sainik Rest House is to provide suitable and cheap accommodation to the ESM during their short visit to the State Capital/District Headquarters for settlement of their pension cases and other matters like availing the facilities of CSD Canteens, hospitals etc. They desire that construction of the Sainik houses, which are already approved, should not suffer from due to allocation of funds issues and other minor formalities. Further, they recommend that tie-ups with private and public budget accommodations in a State may also be explored for comfort of ESM. The action taken on these recommendations of the Committee should be furnished within one month of the presentation of this report.

EX-SERVICEMEN CONTRIBUTORY HEALTH SCHEME (ECHS)

Budgetary provisions and Medical bills pending with ECHS

73. The Committee note that ECHS has been allocated ₹ 3,301.98 crore under Revenue (BE) Head, against the projection of ₹ 6,892.00 crore in 2020-21. Also, the projected amount for Capital head under BE 2020-21 is ₹ 51 crore. The carried forward liability in 2019-20 was ₹ 1,947.39 crore. A representative of ECHS, while tendering his evidence before the Committee, submitted that in the last five years, on an average, the funds allotted to ECHS are around ₹ 3,200 crore and an average carry forward liability every year is ₹ 2,200 crore. Admittedly, this is the reason for lapse in payment to the empanelled hospitals. As this lapse in timely payment of medical bills of the empanelled hospitals may have detrimental effects on the healthcare services provided to the ECHS beneficiaries, the Committee strongly recommend that additional funds should be provided to ECHS to eliminate pendency of Medical Treatment related

217 expenditure. Further, the Ministry should also institute foolproof measures to scrutinize false medical bill claims and apprise the Committee accordingly.

Authorized and actual manpower for ECHS Polyclinics

74. After examining the data of authorized and actual Manpower at ECHS Polyclinics submitted by the Ministry, the Committee are surprised to find that against the sanctioned strength of 61, there is no availability of radiologists in ECHS polyclinics. A representative of the Ministry submitted before the Committee that there is a problem of hiring medical specialists, sometimes even hiring gynaecologists and radiologists, because of the pay issues. This is being addressed through offering hourly basis consultation to the doctors. The Committee, in this context, recommend that new technology of providing radiology services through telemedicine may be explored as an option at ECHS polyclinics at the earliest for compensating lack of radiologists. Nevertheless, all efforts be done to recruit radiologists as a long-term measure.

Merger of Military hospitals with existing ECHS Polyclinics

75. The Committee learn that a proposal regarding utilization of spare capacities of the military hospitals is under consideration by the Ministry. They have been apprised that there are about 129 military policlinics, out of which, about 100 have been identified which are close to the military hospitals. The Committee are of the considered view that this step will invariably lead to better service delivery, gainful utilization of infrastructure, medicinal supplies, optimal use of doctors and administration of the military hospitals. Therefore, they recommend that identification and merger of such military hospitals is done at the earliest and the Committee be apprised accordingly.

Expansion of ECHS

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76. The Committee understand that Fixed Medical Allowance (FMA) has been authorized to all ECHS beneficiaries who are residing in far flung areas where Polyclinics are not available. Further, a proposal for opening of 102 new Polyclinics is under consideration and proposal for procurement of ambulances and Mobile Medical Units is under process. Taking into account the difficulties experienced by the veterans and their dependents dwelling in remote and difficult areas of the country in accessing and utilizing health care services, the Committee recommend that the proposals for opening up of new polyclinics, procurement of ambulances and Mobile Medical Units should be accorded topmost priority by the Ministry of Defence. The action taken by the Ministry on these proposals may be intimated to the Committee within three months of the presentation of this Report.

DEFENCE PENSION

Budgetary Provisions 77. The Committee observe that Defence Pensions, under the Ministry of Defence provides for Pensionary charges in respect of retired Defence personnel (including Defence civilian employees) of the three services viz. Army, Navy and Air Force and also employees of Ordnance Factories etc. It covers payment of Service pension, gratuity, family pension, disability pension, commuted value of pension, leave encashment etc. The Committee have been apprised that the amount allocated for BE 2020-21 in respect of Defence Pensions is ₹ 1,33,825.00 crore, which is ₹ 16,014.56 crore more than the allocation of RE 2019-20. The requirement of ₹ 1,33,825.00 crore for BE 2020-21 has been worked out after taking into Dearness Relief announced by the Government, growth in pension, increase in amount of Gratuity, Family Pension, Leave Encashment and superannuation and retirement benefits as a result of increase in number of retirees. The Committee have already made their recommendation on this aspect of rising defence pension liabilities in the preceding Recommendation at Sl. No. 12.

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Tax Exemption on disability Pension

78. During deliberations on DFG 2020-21, the issue of income tax exemption on disability Pension was discussed. The Committee have been apprised that clarification on this issue from the Central Board of Direct Taxes (CBDT) reads as under: “The tax exemption will be available only to armed forces personnel who have been ‘invalidated’ from service on account of bodily disability attributable to or aggravated by such service and not to personnel who have been retired on superannuation or otherwise.”

The Chief of Defence Staff, while depositing before the Committee, stated that the disability pension includes battle casualty pension and those who have got disabled due to lifestyle diseases or other issues. After the 6th Pay Commission, the disability pension became a part of the retiring salary i.e. the last salary drawn at the time of retirement. Hence, there is a very wide variation of pension between the Officers and the Jawans for the same disability, causing some grievance amongst the Jawans. Further, the person who suffers the disability is provided continuous medical support by the Services. The Committee find that the latest development in this regard is that the Ministry of Defence has directed the Principal Controller of Defence Accounts (PCDA) to stop deducting income tax from those pensioners affected by disability. They, therefore, recommend that the factual position in this regard may be intimated within one month of the presentation of this report and clear decision of the Government in this regard should be communicated to all personnel, serving and retired, to obviate any chances of misapprehensions and feeling of soreness amongst them, under intimation to the Committee.

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One Rank One Pension (OROP)

79. The Committee have learnt that Government of India had taken the decision to implement OROP in November 2015 and issued orders on 7.11.2015 for implementation of OROP for the Defence Forces Personnel. Detailed instructions relating to implementation of OROP along with tables indicating revised pension for each rank and each category was issued on 3.2.2016. The salient features of the OROP, as the Committee learn, are as under:-

(i) Pension of the past pensioners would be re-fixed on the basis of pension of retirees of calendar year 2013 and the benefit will be effective with effect from 01.07.2014.

(ii) Pension will be re-fixed for all pensioners on the basis of the average of minimum and maximum pension of personnel retired in 2013 in the same rank and with the same length of service.

(iii) Pension for those drawing above the average shall be protected.

(v) The pension would be re-fixed every 5 years.

80. The Committee further learn that a sum of ₹ 10,795.4 crore has been disbursed up to 30.9.2017 (data compiled till 1.5.2018) for Defence Pensioners/Family pensioners on account of implementation of OROP. The next revision of pension under OROP is due w.e.f. 01.07.2019. With the

221 approval of the Raksha Mantri, orders have been issued on 14.6.2019 to constitute a Committee under the Chairmanship of Controller General of Defence Accounts (CGDA) to work out the modalities and methodology of implementation of next revision of pension under OROP.

81. As regards the steps being taken to address the grievances and discontent of Ex-servicemen/family pensioners w.r.t. OROP, the Ministry of Defence submitted that there is a separate category for grievances regarding OROP policy issues in the Centralized Public Grievance Redress and Monitoring System (CPGRAM), which are examined as per the extant policies and replies are sent to the petitioners in a time bound manner. The Ministry of Defence has also informed the Committee that the Government had appointed One Member Judicial Committee (OMJC) headed by Justice L. Narasimha Reddy, Retired Chief Justice of Patna High Court to look into anomalies, if any, arising out of implementation of OROP and its Report has been submitted to the Government. An internal committee has been constituted to examine the recommendations of OMJC with respect to the feasibility, impact of recommendations on other existing provisions and financial aspects in implementation of the recommendations. In this regard, the Committee recommend that findings and recommendations of OMJC on the anomalies, if any, arising out of implementation of OROP should be expeditiously implemented and budget, modalities and method of implementation required for this purpose as well as next revision of OROP should be worked out in advance to ensure timely disbursement of pension/arrears and eliminate any chances of grievances of the pensioners in this regard.

SAINIK SCHOOLS

Budgetary provisions and challenges 82. The Committee observe that against a projection of ₹ 115 crore, the Sainik Schools were allocated ₹ 40.40 crore for 2019-20, a shortfall of ₹ 74.60 crore. The projection for the year 2020-21 is ₹ 116 crore. There is no separate

222 budget for the Sainik Schools in Defence Budget and they get the money from the Army Budget itself. During the course of the examination of Demands for Grants 2020-21, the Committee were apprised that few major problems being faced by the Sainik Schools are shortage of funds, inadequate infrastructure, poor quality of staff and lack of manpower. The Secretary (Defence Planning) submitted before the Committee that a separate head ‘Grant-in-Aid’ earmarked for the Sainik Schools may be created to support them. The Committee are of the considered view that expenditure on Sainik Schools is an investment for nation building as the primary aim of the Sainik Schools is to prepare cadets for entry into National Defence Academy and Naval Academy. Therefore, the Committee recommend that the requisite ‘Grant-in-aid’ head for the Sainik Schools should be created at the earliest and they be apprised accordingly. Further, option of arranging Corporate Social Responsibility (CSR) funds may also be explored by the Ministry.

Admission of Girl students in Sainik Schools

83. The Committee in their Twentieth Report (16th Lok Sabha) had recommended the Ministry of Defence to seriously look into the matter of admission of girl students in Sainik Schools and initiate the process of creating requisite infrastructure. It is heartening to learn that based on the success of the Pilot Project for admission of girl children in Sainik School, Chhingchhip in Mizoram for two years from the academic session 2018-2019, the Government has decided to continue girls’ admission in Chhingchhip and also to implement the decision of admission of girls in other Sainik Schools. Besides, admission of girl child in 5 Sainik Schools viz. Kalikiri (Andhra Pradesh), Kodagu (Karnataka), Gorakhal (Uttarakhand), Chandrapur (Maharashtra) and Bijapur (Karnataka) has also been approved and admission process is under way for admission from academic session 2020-21. In remaining Sainik Schools of the country, admission of girls will be implemented from the academic session 2021-22. Opining that admission of girls in Sainik Schools will provide huge

223 opportunities for the girls to join the Defence Forces in future, the Committee recommend that necessary budgetary support for creation of requisite infrastructure and staff for admission of girl students should be extended to the Sainik Schools.

Intake of Sainik School Students into National Defence Academy (NDA)

84. The Committee note that against the NDA course strength of 638, 148 Sainik School students were selected in 2018-19. A representative of the Ministry informed the Committee that the success rate for cadets of Sainik Schools is almost 18 per cent whereas it is 0.1 to 0.2 per cent for the cadets coming from the civil schools. The Defence Secretary deposed that due to excellent quality of the education system in the Sainik Schools, many students take admission in these schools; however, they do not opt to go to NDA/Naval academy but other sectors. The Committee are pleased to note the pristine quality of education being provided in the Sainik Schools, yet, they opine that primary focus of the Sainik Schools should be to prepare the students for joining the Defence Forces. This main objective is what separates the Sainik Schools from the rest of the schools in the country. Therefore, the Committee recommend that appropriate measures should be instituted by the Ministry of Defence to increase the number of cadets in NDA and Naval Academy.

Expansion of Sainik Schools

85. The Committee have been apprised that presently, there are 33 Sainik Schools in the country and 15 new proposals for Sainik Schools are under consideration by the Ministry of Defence. They note that Sainik Schools are opened in a State only on receipt of a specific request from the State Government. The contribution of the State for a Sainik School include grant of land, building, maintenance and scholarships. As far as role of the Union Government is concerned, it includes posting of suitable Service Officers for

224 the posts of Principal, Vice Principal and Administrative Officer in the Sainik Schools, providing training grants to the schools regularly to upgrade their training infrastructure and skills, carrying out annual inspection of the schools to monitor the functioning of the schools and conducting training programmes for teaching faculty, other staff and workshops for officers to enhance their professional competence. The Committee, in this context, recommend that the proposals for construction of the Sainik Schools received from the willing State governments should be expedited and pace and quality of construction in the ongoing projects should continuously be monitored by the Ministry of Defence. Regular interactions with the State governments and other stakeholders should be conducted to obviate impediments in timely completion of the construction and maintenance of the Sainik Schools.

New Delhi; JUAL ORAM 12 March, 2020 Chairperson 22 Phalguna, 1941 (Saka) Standing Committee on Defence

225

STANDING COMMITTEE ON DEFENCE

MINUTES OF THE SIXTH SITTING OF THE STANDING COMMITTEE ON DEFENCE (2019-20)

The Committee sat on Monday, the 17 February, 2020 from 1400 hrs. to 1800 hrs. in Committee Room No. 62, Parliament House, New Delhi.

PRESENT SHRI JUAL ORAM - CHAIRPERSON

LOK SABHA

2. Shri Ajay Bhatt 3. Shri Kapil Moreshwar Patil 4. Shri Jugal Kishore Sharma 5. Shri Brijendra Singh 6. Shri Kotagiri Sridhar 7. Dr. Kalanidhi Veeraswamy

RAJYA SABHA

8. Dr. Ashok Bajpai 9. Shri Prem Chand Gupta 10. Shri V. Lakshmikantha Rao 11. Lt. Gen. Dr. D. P. Vats 12. Dr. Sudhanshu Trivedi

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SECRETARIAT

1. Smt. Kalpana Sharma - Additional Secretary 2. Dr. Sanjeev Sharma - Director 3. Shri Rahul Singh - Deputy Secretary

LIST OF WITNESSESS

MINISTRY OF DEFENCE

Sl. No. Name & Designation 1. Gen. Bipin Rawat, CDS & Secy. DMA 2. Dr Ajay Kumar, Defence Secretary 3. Smt. Gargi Kaul, Secy. Def. Fin. 4. Smt. Sanjeevanee Kutty, Secy. (ESW) 5. Shri Raj Kumar, Secy. DDP 6. Shri Jiwesh Nandan, Additional Secretary 7. Smt. Deepa Bajwa, DGDE 8. DG K Natarajan, DGICG 9. Ms. Mala Dutt, AS & FA 10. Dr. Chitra Rajagopal, DG(R&M) & DS 11. Lt. Gen SK Saini, VCOAS 12. Lt. Gen Gopal R, QMG 13. Lt Gen SS Hasabnis, DCOAS(P&S) 14. Lt. Gen SK Upadhya, MGO 15. Lt. Gen Raj Shukla, DG PP 16. Lt. Gen TK Chawla, DG FP 17. Lt. Gen Sanjay Verma, DGWE 18. Lt. Gen RK Anand, DG LW&E

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19. Lt. Gen Arvind Dutta, Adjutant General 20. Lt. Gen Manoj C Pande, DG (DC&W) 21. Shri Pudi Hari Prasad, JS(ESW) 22. Smt. Nazli J. Shayin, JS(L&W) 23. Shri Subir Mallick, Addl. FA & JS 24. Shri Alok Gupta, Sr. Addl. DG 25. Shri Ravi Shankar, Addl. DG 26. Smt. Sonam Yangdol, Addl. DG (Cantt.) 27. Shri Rakesh Mittal, Addl, DG (Adm/Coord/ IT) 28. Shri Rajesh Sharma, Addl. FA & JS 29. Shri AN Das, Addl FA & JS 30. Shri RK Karna, Addl. FA & JS 31. Shri Ashwini Kumar, Addl FA & JS 32. Shri Vedveer Arya, FM(MS) 33. Shri Ghayas Uddin Ahmed, FM(LS) 34. Shri Puneet Agarwal, FM(Air) 35. Maj Gen H Dharmarajan, ADG FP 36. Maj Gen AK Channan, ADG PP ‘B’ 37. Maj Gen JV Prasad, MD ECHS 38. Maj Gen MK Sagoch, DG(Res.) 39. IG KR Suresh, DDG (Ops & CS) 40. Cmde SK Chauhan, PD DGR 41. Air Cmde Sreeji, Director (Trg) 42. Brig Mrigendra Kumar, Secy., KSB 43. Brig SBK Singh, Dy MD ECHS 44. DIG SC Gupta, PD(P&B) 45. DIG Yoginder Dhaka, D(Plans) 46. Shri Purusottam Bej, Director, Budget, Finance & Material Management 47. Shri K.C. Gupta, DDG 48. Shri Harendra Singh, DDG

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49. Shri Madhukar Naik, DDG(Lands-I) 50. Smt. Shalini Pandey, DDG(Cantt) 51. Smt. Sharmistha Maitra, DDG(Adm/Coord) 52. Dr. Ravindra Singh, Director 53. Shri Pankaj Srivastava, Director (Lands) 54. Gp Capt Regi Sukumaran, Director (P&FC) ECHS 55. Shri Ambarish Barman, Director (Budget) 56. Shri Pankaj Srivastava, Director (Lands) 57. Dr. PP Sharma OSD(Res.II) 58. Brig UK Ojha, Brig FP(B) 59. Brig Tarun Agrawal, Brig FP(A) 60. Brig Hardev Singh Sohi, Brig DIAV 61. Brig Vikramjit Singh Gill, MA to VCOAS 62. Brig Sukriti S Dahiya, Brig Budget 63. Brig SB Singh, Brig P&M 64. Brig Yogesh Chaudhary, Brig P&M 65. Brig Gurpreet Singh, Brig PP (Plans)

2. At the outset, the Chairperson welcomed the Members of the Committee and informed them of the agenda for the Sitting i.e. oral evidence of the representatives of Ministry of Defence in connection with examination of Demands for Grants for the year 2020-21 on the subjects ‘General Defence Budget, Ministry of Defence (Civil), Directorate General Defence Estates (DGDE), Ex-Servicemen Welfare, Ex- Servicemen Contributory Health Scheme (ECHS) and Coast Guard Organization’. He also welcomed Dr. Sudhanshu Trivedi, a new Member to the Committee. The Committee then invited the representatives of the Ministry of Defence and the Services/Organisations. The Chairperson welcomed the representatives to the Sitting of the Standing Committee on Defence and drew their attention to Direction 55(1) of the Directions by the Speaker, Lok Sabha regarding confidentiality of the proceedings. He further emphasized that the Ministry should vet the draft Reports from security view-point within the prescribed timeline, i.e., two days.

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3. Thereafter, the Chairperson requested the representatives of the Ministry of Defence to brief the Committee on various issues included in the agenda for the day. The Defence Secretary initiated the discussion by touching upon Defence Services Estimates and other Demands for Grants of the Ministry of Defence.

4. Then, a Power Point Presentation on General Defence Budget was made before the Committee. This was followed by detailed deliberations on the following issues:

i. Difference between projection and allocation of funds; ii. Reforms initiated by the Ministry of Defence to streamline expenditure and mobilize additional resources; iii. Challenges faced due to increasing Defence pension liabilities and steps taken/contemplated to address it; iv. Responsibilities of the Chief of Defence Staff; v. Bringing about jointness and integration amongst the three Services; vi. Initiatives to promote Research and Development in Defence sector; vii. Modernization of the Forces; viii. Revenue generation by commercialization of suitable Defence lands; ix. Steps taken to promote Defence exports x. Technology used for countering infiltration; xi. Safe storage of arms and ammunition in Ammunition Depots; xii. Rescue of jawans hit/trapped by avalanches; and xiii. Mechanisms to eliminate suicide cases amongst the Forces .

5. Thereafter, a Power Point Presentation by the representatives of the Directorate General Defence Estates (DGDE) was made. This was followed by extensive discussion on the following points:

i. Need for amendment of Cantonment Board Act, 2006; ii. Proposal to convert civil areas of Cantonments into municipalities; iii. Commercial use of leased properties in Cantonment areas;

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iv. Feasibility of extension of lease period for residential purposes in Cantonment Areas and steps being taken for a permanent lease policy;

v. Commercial use of suitable Defence Lands; and vi. Issues related to convenience of the civilian population residing in the Cantonment areas.

6. Next, a Power Point Presentation was made by the representatives of the Department of Ex-Servicemen Welfare. This was followed by detailed deliberations on following issues:

i. Difference between projection and allocation of funds; ii. Issues related to welfare of Ex-Servicemen such as toll tax exemption, construction of Sainik Rest Houses, payment of ex-gratia to the dependents of martyrs; iii. Anomalies in allowance to personnel posted in North-Eastern parts; iv. Rationalization of manpower in Army; and v. Modernisation.

7. Consequently, a Power Point Presentation was made by the representatives of the Ex-Servicemen Contributory Health Scheme (ECHS), which was followed by discussion on following issues: i. Issue of pendency of payments of bills of hospitals empanelled under ECHS; ii. Authorised and actual manpower for ECHS Polyclinics; iii. Merger of Military hospitals with existing ECHS Polyclinics; and iv. Major achievements of ECHS.

8. Thereafter, the Chairperson invited representatives of the Coast Guard Organisation. The representatives of the Coast Guard Organisation commenced their briefing through a Power Point presentation. This was followed by discussion on following issues:

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i. Budgetary provisions for Indian Coast Guard; and ii. Steps taken to address challenges and constraints faced by the Indian Coast Guard.

9. The Chairperson directed the representatives of the Ministry to furnish written replies/information on the points raised by the Members at the earliest.

The Committee then adjourned.

A copy of verbatim record of the proceedings has been kept.

232

STANDING COMMITTEE ON DEFENCE (2019-20)

MINUTES OF THE SEVENTH SITTING OF THE STANDING COMMITTEE ON DEFENCE (2019-20)

The Committee sat on Tuesday, the 18 February, 2020 from 1400 hrs. to 1800 hrs. in Committee Room No. 62, Parliament House, New Delhi.

PRESENT

SHRI JUAL ORAM – CHAIRPERSON

MEMBERS

LOK SABHA

2. Shri Ajay Bhatt 3. Shri Nitesh Ganga Deb 4. Shri Annasaheb Shankar Jolle 5. Shri Kapil Moreshwar Patil 6. Shri Anumula Revanth Reddy 7. Dr. Shrikant Eknath Shinde 8. Shri Brijendra Singh 9. Shri Mahabali Singh 10. Shri Kotagiri Sridhar 11. Dr. Kalanidhi Veeraswamy RAJYA SABHA 12. Dr. Ashok Bajpai 13. Shri Prem Chand Gupta 14. Shri V. Lakshmikantha Rao 15 Dr. T. Subbarami Reddy 16. Lt. Gen. Dr. D.P. Vats 17. Dr. Sudhanshu Trivedi

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SECRETARIAT

1. Smt. Kalpana Sharma - Additional Secretary 2. Dr. Sanjeev Sharma - Director 3. Shri Rahul Singh - Deputy Secretary

LIST OF WITNESSESS

MINISTRY OF DEFENCE

Sl. No. Name & Designation 1. Gen. Bipin Rawat, CDS & Secy. DMA 2. Dr Ajay Kumar, Defence Secretary 3. Smt. Gargi Kaul, Secy. Def. Fin. 4. Ms. Mala Dutt, AS & FA 5. Shri Jiwesh Nandan, Additional Secretary 6. Shri VL Kantha Rao, Addl. Secy. (DP) 7. Lt. Gen TK Chawla, DG FP 8. Lt. Gen SK Upadhya, MGO 9. Lt. Gen Sanjay Chauhan, DGQA 10. Lt. Gen Paramjit Singh, DGMO 11. Lt. Gen SK Shrivastava, E-in-C 12. Lt. Gen Sanjay Verma, DGWE 13. Lt. Gen SK Saini, VCOAS 14. Lt Gen SS Hasabnis, DCOAS(P&S) 15. Lt. Gen Raj Shukla, DG PP 16. Lt Gen Rajeev Chopra, DGNCC 17. Lt. Gen Harpal Singh, DGBR 18. Ms. Nazli Shayin, Joint Secy. (Trg.) 19. Shri Rajeev Singh Thakur, JS(E,L&V)

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20. Shri Shantanu, JS(Works & PA) 21. Ms. Richa Misra, JS(BR) 22. Shri AN Das, Addl FA & JS 23. Shri RK Karna, Addl. FA & JS 24. Shri Ashwini Kumar, Addl FA & JS 25. Shri Subir Mallick, Addl. FA & JS 26. Shri Rajesh Sharma, Addl. FA & JS 27. Shri Vedveer Arya, FM(MS) 28. Shri Ghayas Uddin Ahmed, FM(LS) 29. Shri Puneet Agarwal, FM(Air) 30. Maj Gen H Dharmarajan, ADG FP 31. Maj Gen RK Malhotra, ADGQA(A) 32. Maj Gen SK Khanna, DG Works 33. Maj Gen Virendra Singh 34. Maj Gen AK Channan, ADG PP ‘B’ 35. Shri Rajeev Ranjan, ADG(Adm) 36. Shri AK Agarwal, DDG(West) 37. Brig J James 38. Brig UK Ojha, Brig FP(B) 39. Brig Tarun Agarwal, Brig FP(A) 40. Brig Mohit Nautiyal, DDGW(PPC&Est) 41. Brig Vinayak Saini 42. Brig Vikramjit Singh Gill, MA to VCOAS 43. Brig Sukriti S Dahiya, Brig Budget 44. Brig SB Singh, Brig P&M 45. Brig Yogesh Chaudhary, Brig P&M 46. Brig Gurpreet Singh, Brig PP (Plans) 47. Cmde G. Rambabu 48. Shri AK Jain, SE(Civil)

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2. At the outset, the Chairperson welcomed the Members of the Committee and informed them of the agenda for the Sitting i.e. deliberation on the subjects ‘Army, Border Roads Organization (BRO), Military Engineer Services (MES), Directorate General of Quality Assurance (DGQA), National Cadet Corps (NCC) and Sainik Schools’ in connection with examination of Demands for Grants 2020-21. The Committee then invited the representatives of the Ministry of Defence and the Services/Organisations.

3. The Vice Chief of Army Staff commenced the briefing by giving an overview on Army to the Committee and thereafter, a Power Point presentation was made. This was followed by detailed deliberations on following issues:

i. Budgetary allocation to Army; ii. Maintaining ideal ratio between Revenue and Capital Budget; iii. Modernization of Army; iv. Indigenization efforts of Army; v. Clothing in difficult areas; vi. Optimization of manpower; vii. Protection of troops from Corona virus; and viii. Exhibitions in various constituencies.

4. Thereafter, a Power Point presentation on Border Roads Organization (BRO) was made. This was followed by extensive discussion on the following points:

i. Manpower strength; ii. Feasibility of levying toll tax on commercial vehicles to generate revenue; and iii. Environmental/forest clearances to BRO.

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5. Thereafter, a Power Point presentation was made by the representatives of Military Engineer Services (MES) covering following issues:

i. Budgetary provisions for MES; and ii. Initiatives in MES.

6. Thereafter, the Chairperson invited representatives of Directorate General of Quality Assurance (DGQA). The representatives of DGQA commenced their briefing through a Power Point presentation which was followed by discussion on following issues:

i. Complete utilisation of budget; ii. Manpower strength; iii. Quality check of imports; and iv. Testing of ammunition.

7. Thereafter, the Chairperson invited representatives of the National Cadet Corps (NCC). They made a Power Point presentation before the Committee which was followed by discussion on following issues:

i. Intake of NCC students in the Armed Forces; ii. Percentage of selection of 'C' certificate holders in SSB; iii. Reservation for NCC students in higher education or employment in State and Centre; iv. CSR funds from the PSUs; and v. Employment opportunities for NCC trained youth in Defence Production corridors.

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8. Thereafter, the Chairperson invited representatives of the Sainik Schools. The representatives of the Sainik Schools commenced their briefing through a Power Point presentation which was followed by discussion on following issues:

i. Defence Scholarships; ii. Role of the State Government; iii. Intake of Sainik School students in NDA and Naval Academy; iv. Difference between projection and allocation in budget; v. Exploration of CSR funding; vi. Earmarking separate head of 'Grant-in-aid' for Sainik Schools; and vii. Budgetary provisions for Sainik Schools.

9. The Chairperson directed the representatives of the Ministry to furnish written replies/information on the points raised by the Members at the earliest.

The Committee then adjourned.

A copy of verbatim record of the proceedings has been kept.

238

STANDING COMMITTEE ON DEFENCE (2019-20)

MINUTES OF THE EIGHTH SITTING OF THE STANDING COMMITTEE ON DEFENCE (2019-20)

The Committee sat on Wednesday, the 19 February, 2020 from 1400 hrs. to 1700 hrs. in Committee Room No. 53, Parliament House, New Delhi.

PRESENT

SHRI JUAL ORAM – CHAIRPERSON

MEMBERS

LOK SABHA

2. Shri Ajay Bhatt 3. Shri Annasaheb Shankar Jolle 4. Shri Kapil Moreshwar Patil 5. Shri Anumula Revanth Reddy 6. Shri Jugal Kishore Sharma 7. Shri Brijendra Singh 8. Shri Kotagiri Sridhar 9. Dr. Kalanidhi Veeraswamy

RAJYA SABHA 10. Dr. Ashok Bajpai 11. Shri Prem Chand Gupta 12. Shri V. Lakshmikantha Rao 13. Lt. Gen. Dr. D.P. Vats

239

14. Dr. Sudhanshu Trivedi

SECRETARIAT

1. Smt. Kalpana Sharma - Additional Secretary 2. Dr. Sanjeev Sharma - Director 3. Shri Rahul Singh - Deputy Secretary

LIST OF WITNESSESS

MINISTRY OF DEFENCE

Sl. No. Name & Designation 1. Gen. Bipin Rawat, CDS & Secy. DMA 2. Dr Ajay Kumar, Defence Secretary 3. Smt. Gargi Kaul, Secy. Def. Fin. 4. Ms. Mala Dutt, AS & FA 5. Shri Jiwesh Nandan, Additional Secretary 6. Shri VL Kantha Rao, Addl. Secy. (DP) 7. Air Mshl HS Arora, VCAS 8. Air Mshl Sandeep Singh, DCAS 9. Air Mshl BR Krishna, DG Air (Ops) 10. Air Mshl Rajeev Sachdeva, DCIDS(PP&FD) 11. VAdm G Ashok Kumar, VCNS 12. VAdm R Hari Kumar, CISC 13. Lt. Gen Gopal R, QMG 14. Lt. Gen SK Upadhya, MGO 15. Lt. Gen TK Chawla, DG FP 16. Lt. Gen Sanjay Verma, DGWE 17. Lt. Gen SK Saini, VCOAS 18. Lt Gen SS Hasabnis, DCOAS(P&S) 19. Lt. Gen Raj Shukla, DG PP 20. Shri Vishal Gagan, Joint Secretary (Coord) 21. Shri AN Das, Addl FA & JS

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22. Shri RK Karna, Addl. FA & JS 23. Shri Ashwini Kumar, Addl FA & JS 24. Shri Subir Mallick, Addl. FA & JS 25. Shri Rajesh Sharma, Addl. FA & JS 26. Shri Vedveer Arya, FM(MS) 27. Shri Ghayas Uddin Ahmed, FM(LS) 28. Shri Puneet Agarwal, FM(Air) 29. Maj Gen H Dharmarajan, ADG FP 30. Maj Gen RV Singh, ACIDS(FP) 31. Maj Gen AK Channan, ADG PP ‘B’ 32. RAdm Sameer Saxena, ACNS(P&P) 33. RAdm Kapil Mohan Dhir, JS(Navy) 34. AVM J Mishra, ACAS (Proj) 35. AVM SK Jha, JS(Air) 36. Air Cmde VN Srinivas, Fin P 37. Brig UK Ojha, Brig FP(B) 38. Brig Tarun Agarwal, Brig FP(A) 39. Brig Vikramjit Singh Gill, MA to VCOAS 40. Brig Sukriti S Dahiya, Brig Budget 41. Brig SB Singh, Brig P&M 42. Brig Yogesh Chaudhary, Brig P&M 43. Brig Gurpreet Singh, Brig PP (Plans) 44. Cmde Joginder Chandna, Cmde (Budget) 45. Shri Ambarish Barman, Dir. (Budget)

2. At the outset, the Chairperson welcomed the Members of the Committee and informed them of the agenda for the Sitting. The Committee then invited the representatives of the Ministry of Defence and the Defence Services. The Chairperson welcomed the representatives to the sitting of the Standing Committee on Defence and requested them to brief the Committee on various issues included in

241 the agenda for the day. He also drew their attention to Direction 55(1) of the Directions by the Speaker, Lok Sabha.

3. The representatives of the Ministry of Defence commenced their briefing through a Power Point presentation on Navy. This was followed by detailed deliberations on the following issues:

(i) Shortfall in demand and allocation of budget; (ii) Planning projects on self financing model; (iii) Manpower and training; (iv) Depletion in fleet strength; (v) Obsolescence; (vi) Delay in delivery of vessels by Shipyards; (vii) Modernization of naval airfields; (viii) International maritime cooperation; (ix) Implementation of safety measures; and (x) Challenges in Indian Ocean Region and preparedness of Navy etc.

4. Thereafter, a presentation on Joint Staff was made which was followed by discussion on following points: (i) Role and responsibilities of Joint Staff; and (ii) Intelligence gathering and dissemination, etc.

5. Subsequent to a briefing by the Vice Chief of the Air Staff regarding overview on modernization plan of Indian Air Force (IAF), a Power Point presentation was made. This was followed by detailed deliberations on following issues:

i. Aircraft maintenance issues by Hindustan Aeronautics Limited (HAL); ii. Squadron strength and geo-political challenges in the region; iii. Proposal for IAF pilots travelling to space; iv. Shortfall in budget;

242

v. Decline in percentage of budget; vi. Increasing use of Unmanned Air Vehicles and drones; vii. Use of missiles in air defence; and viii. Difference between projection and allocation of funds and effect on Air defence preparedness, etc.

6. Thereafter, a presentation was given by Canteen Stores Department and followed by discussion on following points: (i) Commencement of online shopping facilities; (ii) Manpower Strength; (iii) Budgetary Provisions; (iv) Qualitative requirements of opening Unit Run Canteens in an area; and (v) Use of Technology in Centarl Warehousing System in CSD, etc.

7. The Chairperson directed the representatives of the Ministry to furnish written replies/information on the points raised by the Members at the earliest.

The Committee then adjourned.

A copy of verbatim record of the proceedings has been kept.

243

STANDING COMMITTEE ON DEFENCE (2019-20)

MINUTES OF THE NINTH SITTING OF THE STANDING COMMITTEE ON DEFENCE (2019-20)

The Committee sat on Thursday, the 20 February, 2020 from 1400 hrs. to 1630 hrs. in Committee Room ‘C’, Parliament House Annexe, New Delhi.

PRESENT

SHRI JUAL ORAM – CHAIRPERSON

MEMBERS

LOK SABHA

2. Shri Ajay Bhatt 3. Shri Annasaheb Shankar Jolle 4. Shri Pashupati Kumar Paras 5. Shri Kapil Moreshwar Patil 6. Shri Anumula Revanth Reddy 7. Shri Jugal Kishore Sharma 8. Shri Brijendra Singh 9. Shri Kotagiri Sridhar RAJYA SABHA 10. Dr. Ashok Bajpai 11. Shri Prem Chand Gupta 12. Shri V. Lakshmikantha Rao 13. Shri Sanjay Raut 14. Lt. Gen. Dr. D.P. Vats

244

SECRETARIAT

1. Smt. Kalpana Sharma - Additional Secretary

2. Shri Rahul Singh - Deputy Secretary

LIST OF WITNESSESS MINISTRY OF DEFENCE

Sl. No. Name Designation

1. Gen. Bipin Rawat CDS & Secy. DMA 2. Dr Ajay Kumar Defence Secretary 3. Smt. Sanjeevanee Kutty Secy. (ESW) 4. Smt. Gargi Kaul Secy. Def. Fin. 5. Shri Sanjiv Mittal CGDA 6. Mrs. Mala Dutt Addl. Secy. & FA (Acq) 7. Shri Jiwesh Nandan Additional Secretary 8. Shri VL Kantha Rao Addl. Secy. (DP) 9. Shri Apurva Chandra DG(Acq) 10. VAdm G Ashok Kumar VCNS 11. Lt. Gen TK Chawla DG FP 12. Lt. Gen SK Upadhya MGO 13. Lt. Gen RK Anand DG LW&E 14. Lt. Gen Sanjay Verma DGWE 15. Lt. Gen SK Shrivastava E-in-C 16. Lt. Gen Arvind Dutta Adjutant General 17. Lt. Gen Manoj C Pande DG (DC&W) 18. Lt. Gen SK Saini VCOAS 19. Lt Gen SS Hasabnis DCOAS(P&S) 20. Lt. Gen Raj Shukla DG PP 21. Lt. Gen Gopal R QMG 22. Air Mshl HS Arora VCAS 23. Air Mshl Sandeep Singh DCAS 24. Air Mshl Rajeev Sachdeva DCIDS(PP&FD) 25. Air Mshl BR Krishna, DG Air (Ops) 26. Dr. Md Nazumuddin Eco Adv & JS (DOMW) 27. Shri Vishal Gagan Joint Secretary (Coord) 28. Shri Pudi Hari Prasad JS(ESW)

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29. Shri Sanjai Singh JS&AM(MS) 30. Shri Shantanu JS(Works & PA) 31. Smt. Dipti Mohil Chawla JS&AM(LS) 32. Shri Sanjai Singh JS&AM(Air) 33. Shri AN Das Addl FA & JS 34. Shri RK Karna Addl. FA & JS 35. Shri Ashwini Kumar Addl FA & JS 36. Shri Subir Mallick Addl. FA & JS 37. Shri Rajesh Sharma Addl. FA & JS 38. Shri Vedveer Arya FM(MS) 39. Shri Ghayas Uddin Ahmed FM(LS) 40. Shri Puneet Agarwal FM(Air) 41. Ms. Anuradha Mitra Addl. CGDA 42. Shri Vishvajit Sahay PCDA(Pension) 43. RAdm Sameer Saxena ACNS(P&P) 44. RAdm Kapil Mohan Dhir JS(Navy) 45. Maj Gen H Dharmarajan ADG FP 46. Maj Gen Jagdeep Singh Ishar DG MAP 47. Maj Gen AK Channan ADG PP ‘B’ 48. AVM J Mishra ACAS (Proj) 49. IG TP Sadanandan DDG(M&M) 50. Shri Kanwaldeep Singh Jt CGDA (Pen &PD) 51. Smt. Vinakshi Gupta Jt. CGDA 52. Shri Virender Kumar Adhana Dir. (Acq) 53. Brig Paritosh Shah 54. Brig UK Ojha Brig FP(B) 55. Brig Tarun Agrawal Brig FP(A) 56. Brig Vikramjit Singh Gill MA to VCOAS 57. Brig Sukriti S Dahiya Brig Budget 58. Brig SB Singh Brig P&M 59. Brig Yogesh Chaudhary Brig P&M 60. Brig Gurpreet Singh Brig PP (Plans) 61. Dr. PP Sharma OSD(Res.II) 62. Shri Jitender Kumar DS(Res.I) 63. Shri Ajay Kumar Agarwal DS(Pen/P) 64. Air Cmde VN Srinivas Fin P 65. Shri T.D. Diwivedi Director (Air-II) 66. Shri Ambarish Barman Dir. (Budget)

246 the representatives of the Ministry of Defence to brief the Committee on various issues included in the agenda for the day and drew their attention to Direction 55(1) of the Directions by the Speaker, Lok Sabha.

3. The representative of the Ministry then gave power point presentation on Married Accommodation Project. This was followed by detailed discussions on the subjects and Members asked questions on the following issues:

(i) Budgetary allocations for MAP; (ii) NBCC model for MAP; (ii) requirement of equal value infrastructure; (ii) review of satisfaction level of the Forces; (iii) early completion of MAP; and (iv) use of latest technologies in construction of MAP.

4. Thereafter, a Power Point presentation by representative of Ministry of Defence on Defence Procurement Policy was made. This was followed by extensive discussion on the following points:

i. Ensuring quality of products manufactured under ‘Make in India’; ii. Servicing of equipment provided by new indigenous companies and their sustainability; iii. Efforts to encourage indigenization in Defence Sector to reduce dependence on imports; iv. Value of contracts in terms of amount being awarded to foreign vendors; and v. Steps taken to achieve timely, effective and efficient procurement.

5. Thereafter, a Power Point presentation on Ministry of Defence (Pension) was made by representative of Ministry of Defence. This was followed by extensive discussion on the following points:

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(i) Review of financial implications of Defence Pensions; (ii) Broad banding of soldiers and officers; (iii) Issues related to One Rank One Pension (OROP); and (iv) Income Tax provisions for battle casualties i.e. service personnel who were invalidated from active services.

6. The Chairperson directed the representatives of the Ministry of Defence and other organisations to furnish written replies to all the queries at the earliest.

A copy of verbatim record of the proceedings has been kept.

The Committee then adjourned.

248

STANDING COMMITTEE ON DEFENCE (2019-20)

MINUTES OF THE TENTH SITTING OF THE STANDING COMMITTEE ON DEFENCE (2019-20)

The Committee sat on Friday, the 21 February, 2020 from 1100 hrs. to 1700 hrs. in Committee Room ‘C’, Parliament House Annexe, New Delhi.

PRESENT

SHRI JUAL ORAM – CHAIRPERSON

MEMBERS

LOK SABHA

2. Shri Ajay Bhatt 3. Shri Nitesh Ganga Deb 4. Shri Annasaheb Shankar Jolle 5. Shri Pashupati Kumar Paras 6. Shri Jugal Kishore Sharma 7. Shri Brijendra Singh 8. Shri Mahabali Singh

RAJYA SABHA 9. Dr. Ashok Bajpai 10. Shri Prem Chand Gupta 11. Shri V. Lakshmikantha Rao 12. Shri Sanjay Raut 13. Lt. Gen. Dr. D.P. Vats 14. Dr. Sudhanshu Trivedi

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SECRETARIAT

1. Smt. Kalpana Sharma - Additional Secretary

2. Shri Rahul Singh - Deputy Secretary

LIST OF WITNESSESS

MINISTRY OF DEFENCE

Sl. No. Name & Designation

1. Shri Raj Kumar, Secretary(DP) 2. Dr. G Satheesh Reddy, Secy. DR&D 3. Smt. Gargi Kaul, Secy. Def. Fin. 4. Shri Hari Mohan, DGOF & Chairman/OFB 5. Shri Jiwesh Nandan, Additional Secretary 6. Shri CS Vishwakarma, AV (OFB) 7. Ms. Mala Dutt, AS & FA 8. Dr. MSR Prasad, DS&DG(MSS) 9. Dr. Sudhir Kumar Mishra, DS&DG(BrahMos) 10. Ms. J. Manjula, DS&DG(ECS) 11. Dr. Guru Prasad, DS&DG (PC&SI) 12. Dr. Chitra Rajagopal, DS&DG(R&M) 13. Dr. Samir V Kamat, DS&DG(NS&M) 14. Dr. Tessy Thomas, DS&DG(Aero) 15. Shri Pravin K Mehta, DS&DG(ACE) 16. Shri Sudhir Gupta, OS&DG(TM) 17. Shri KS Varaprasad, DS&DG(HR) 18. Dr. AK Singh, DS&DG(LS) 19. Dr. Sudhir Kamath, OS&DG(MED & CoS) 20. Ms. Nabanita R Krishnan, OS&DG(SAM) 21. Lt. Gen SK Saini, VCOAS 22. Shri Vishal Gagan, Joint Secretary (Coord) 23. Dr. Amit Sahai, JS(P&C) 24. Shri Puneet Agarwal, JS(LS) 25. Dr. Md. Nazmuddin, Eco Advisor 26. Shri RK Karna, Addl. FA & JS 27. Shri Ashwini Kumar, Addl FA & JS 28. Shri Subir Mallick, Addl. FA & JS 29. Shri Rajesh Sharma, Addl. FA & JS 30. Shri Vedveer Arya, FM(MS) 31. Shri Ghayas Uddin Ahmed, FM(LS) 32. Shri Puneet Agarwal, FM(Air)

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33. Shri Prateek Kishore, OS & Dir., P&C 34. Shri Atul D Rane, OS & Dir, DIC 35. Shri Purusottam Bej, OS & Dir, Budget, Finance & Material Management 36. Dr. Chandrika Kaushik, OS& Dir, DISB 37. Dr. Ravindra Singh, Dir., Parl. Affairs 38. Shri VM Rao, DDG/Coord, OFBNDO 39. Shri Vijay Mittal, DDG/OFBNDO 40. Shri Vivek C Verma, Secretary, OFB 41. Shri PK Dash, DDG/P&P, OFB 42. Shri N.I. Laskar, DDG/Bud, OFB 43. Shri B Krishnamoorthy, Director/OFBNDO 44. Ms. Mala Dutt, AS & FA 45. Shri VL Kantha Rao, Addl. Secy. (DP) 46. Lt. Gen SK Upadhya, MGO 47. Lt. Gen Sanjay Verma, DGWE 48. Lt. Gen TK Chawla, DG FP 49. Lt Gen SS Hasabnis, DCOAS(P&S) 50. Lt. Gen Raj Shukla, DG PP 51. Lt. Gen Gopal R, QMG 52. Cmde Siddharth Mishra (Retd), CMD BDL 53. Shri R. Madhavan, CMD HAL 54. Shri D.K Hota, CMD BEML 55. Cmde B. B Nagpal, NM, CMD GSL 56. Dr. D.K Likhi, CMD MIDHANI 57. RAdm V K Saxena (Retd), CMD GRSE 58. VAdm Narayan Prasad, IN(Retd), CMD MDL 59. Shri Chandraker Bharti, JS(Aero) 60. Shri Sanjay Jaju, JS(DIP) 61. Shri Shrish kumar, OSD(SK) 62. Maj Gen H Dharmarajan, ADG FP 63. Maj Gen AK Channan, ADG PP ‘B’ 64. Maj Gen Surender Pavamani, ADG EM 65. Mrs. Anandi Ramalingam, Dir. (Marketing) BEL 66. Cdr JP Gupta, Dir (CP&P), HSL 67. Brig UK Ojha, Brig FP(B) 68. Brig Tarun Agrawal, Brig FP(A) 69. Brig Vikramjit Singh Gill, MA to VCOAS 70. Brig Sukriti S Dahiya, Brig Budget 71. Brig SB Singh, Brig P&M 72. Brig Yogesh Chaudhary, Brig P&M 73. Brig Gurpreet Singh, Brig PP (Plans) 74. Shri Ambarish Barman, Dir. (Budget)

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2. At the outset, the Chairperson welcomed the Members of the Committee and informed them of the agenda for the Sitting. The Committee then invited the representatives of the Ministry of Defence. The Chairperson welcomed the representatives to the sitting of the Standing Committee on Defence and requested them to brief the Committee on various issues included in the agenda for the day. He also drew their attention to Direction 55(1) of the Directions by the Speaker, Lok Sabha.

3. The representatives of the Ministry of Defence commenced their briefing through a Power Point presentation on Defence Public Sector Undertakings. This was followed by detailed deliberations on the following issues:

1) Use of CSR funds of DPSUs for Sainik Schools; 2) To make efforts to achieve 90 percent of Indian made technique, knowledge and skill in Defence Production by DPSUs; 3) Inadequate capacity utilization due to low order book of DPSUs which leads to higher cost of production; 4) Efforts being made by Department of Defence Production to minimize the imported items; 5) Modification of Defence Procurement Procedure, 2016 and giving preference to ‘Buy Indian’ which means Indian designing, developing and manufacturing; 6) Efforts of Defence PSUs to indigenise, import substitution, patent filing etc.; 7) Overhauling of imported Aircraft engines in the country; 8) Limitation of exports due to sensitive nature of items; 9) Issue of Orders from Middle-East for guns and tanks etc.; 10) Need to release money and improve reserve position of HAL; 11) Quality of Radars manufactures by BEL; 12) Development of long-range radars by DRDO and BEL; 13) Decline in production of DPSUs; and

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14) Measures to be taken to increase Defence Exports by DPSUs.

4. Thereafter, a Power Point presentation was given by the representatives of the Ordnance Factory Board (OFB), which was followed by discussion on the following points:

1) Use of ammunition for practice by Armed Forces; 2) Present status of MBT Arjun; 3) Exporting of Ordnance Factories’ products to other countries; 4) Upgradation of technology used by Ordnance Factories; 5) Shortage of manpower; 6) Supply of products on ‘No profit No loss’ to Armed Forces; 7) Procurement of ammunition by Army through Ordnance Factories; 8) Ordnance factories interaction with Army for development of products; 9) Late receipt of indents from Army; 10) Lack of orders from Army; 11) Export of High caliber ammunition; and 12) Socks, shoes and Uniform to be declared non-core items.

5. Thereafter, a Power Point presentation was given on Defence Research and Development which was followed by discussion on the following points:

1) Requirement of additional funds to take up futuristic projects; 2) Development of new technologies; 3) Manpower requirement in DRDO; 4) Role of DRDO in selection process of officers; 5) Coordination in Research and Development with private Sector; 6) Basic Research in Academia; 7) Coordination between DRDO and Service Users; 8) Opening of eight centres of excellence in advanced areas; 9) Self-reliance in technology;

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10) Free of cost Technology transfer to private industries; and 11) Skill development and training by DRDO to local youths of two Defence Industrial Corridors-Tamil Nadu and Uttar Pradesh.

6. The Chairperson then directed the representatives of the Ministry of Defence to furnish written replies to all the queries which remain unanswered at the earliest.

A copy of verbatim record of the proceedings has been kept.

The Committee then adjourned.

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MINUTES OF THE ELEVENTH SITTING OF THE STANDING COMMITTEE ON DEFENCE (2019-20)

The Committee sat on Thursday, the 12 March 2020 from 1000 hrs. to 1030 hrs. in Committee Room ‘C’, Parliament House Annexe, New Delhi.

PRESENT Shri Jual Oram - Chairperson

LOK SABHA

2 Shri Hanuman Beniwal 3 Shri Ajay Bhatt 4 Shri Devusinh J. Chauhan 5 Shri Annasaheb Shankar Jolle 6 Prof (Dr.) Ram Shankar Katheria 7 Shri Kapil Moreshwar Patil 8 Shri Jugal Kishore Sharma 9 Dr. Shrikant Eknath Shinde 10 Shri Brijendra Singh 11 Shri Kotagiri Sridhar 12 Dr. Kalanidhi Veeraswamy

RAJYA SABHA

13 Dr. Ashok Bajpai 14 Shri V. Lakshmikantha Rao 15 Smt. Vijila Sathyananth 16 Shri Kamakhya Prasad Tasa 17 Lt. Gen. Dr. D. P. Vats

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SECRETARIAT

1. Smt. Kalpana Sharma - Additional Secretary 2. Dr. Sanjeev Sharma - Director 3. Shri Rahul Singh - Deputy Secretary

2. At the outset, the Chairperson welcomed the Members of the Committee and informed them about the agenda for the sitting. The Committee then took up for consideration the following draft Reports:-

a. Fifth Report of the Standing Committee on Defence (17th Lok Sabha) on 'Demands for Grants of the Ministry of Defence for the year 2020-21 on General Defence Budget, Border Roads Organisation, Indian Coast Guard, Military Engineer Services, Directorate General Defence Estates, Defence Public Sector Undertakings, Canteen Stores Department, Welfare of Ex- Servicemen, Ex-Servicemen Contributory Health Scheme, Defence Pensions and Sainik Schools (Demand Nos. 18, 19, 20 and 21)'; b. Sixth Report of the Standing Committee on Defence (17th Lok Sabha) on 'Demands for Grants of the Ministry of Defence for the year 2020-21 on Army, Navy, Air Force and Joint Staff (Demand Nos.19 and 20)'; c. Seventh Report of the Standing Committee on Defence(17th Lok Sabha) on `Demands for Grants of the Ministry of Defence for the year 2020-21 on Capital Outlay on Defence Services, Procurement Policy, Defence Planning and Married Accommodations Project (Demand Nos. 19 and 20)'; and d. Eighth Report of the Standing Committee on Defence(17th Lok Sabha) on 'Demands for Grants of the Ministry of Defence for the year 2020-21 pertaining to Ordnance Factories, Defence Research and Development Organisation, Directorate General of Quality Assurance, and National Cadet Corps (Demand Nos. 19 and 20 )'.

3. After some deliberations, the Committee adopted the above reports without any modifications. The Hon’ble Chairperson also informed the Members

256 that in case they have any suggestion to make in the draft reports, they may do so by giving it in writing.

4. The Committee, then, authorized the Chairperson to finalise the above draft Reports and present the same to the House on a date convenient to him.

The Committee then adjourned.

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