Rafale On Instalments Is The Answer To Defence Ministry's Tight Budget

New Delhi: When the Rafale fighter deal with France is inked later this year, the Ministry of Defence or MoD will have to pay nearly Rs 6000 crore for it, which is roughly one-tenth of the total cost of the deal, top Ministry officials told NDTV.

"I am not unduly worried," a top a Ministry official told NDTV, adding, "out of box thinking and imaginative accounting will see us through."

Although, final price negotiations are still on, the Rafale purchase deal is likely to cost India about Rs 60,000 crore.

The Ministry of Defence has a little above Rs 80,000 crore to pay for new acquisition this financial year out of its total budget of about Rs 2,50,000 crore.

Of the Rs 80,000 crore, three-fourth will have to be set aside for "committed liabilities" - the MoD's phrase for payments to be made for previous purchases.

Sources told NDTV that for the financial year 2014-15's purchases, Rs 66,000 crore is still being paid for.

In the current financial year, India signed up to purchase defence hardware worth Rs 44,000 crore. This includes two additional Airborne Warning And Control Systems ( AWAC) for the Indian Air Force. Also, And, it expects to ink deals for purchases of about another Rs 15,000 crore by month-end.

The UPA Government in 2013-14 signed for purchases worth Rs 37,000 crore which the Modi Government paid for in the last two years.

In an effort to better manage funds, Defence Minister Manohar Parrikar has asked the three forces to re-evaluate 342 cases of pending purchases - some even a decade old - worth Rs 509 lakh crore.

"Much of these proposed purchases are of technology which is obsolete now and can be cancelled, reducing demand on the available resources," the officer added.

For the Rafale acquisition, to be able to pay in installments is the big relief for the MoD. "We will have just enough to pay the first installment given the current allocation," the officer said.