While The Hindu Report Says Rafale Deal Not Better Than UPA Era, CAG Says It Is 2.86% Cheaper
PM Modi government’s Rafale deal for 36 flyway aircraft was not better than the previous government’s 126 aircraft deal, say the three senior Defence Ministry officials who were the domain experts on the seven-member Indian Negotiating Team (INT). This was unveiled in a report by The Hindu as part of their series on the Rafale Deal.
Interestingly, another report by the Comptroller and Auditor General (CAG) of India said in its audit report that the deal signed by the Modi government in 2016 was 2.86% cheaper than 2007 deal signed by the UPA government.
“New deal not better than the previous”
The three domain experts on the INT in question were M. P. Singh, Adviser (Cost), a Joint Secretary-level officer from the Indian Cost Accounts Service; A.R. Sule, Financial Manager (Air); and Rajeev Verma, Joint Secretary & Acquisitions Manager (Air). An eight-page dissent note was signed by the three members. This note was written a month after the team’s negotiation with the French was completed and three months before the signing of the inter-governmental agreement.
The statements made by these three members, which has now come to light is in contradiction with the Modi government’s claims on the new deal being cheaper and faster delivery of the aircraft. The Hindu report states that the final price arrived under the new deal was about 55.6% higher above what was decided in advance. It was also 5.3% higher than the Aligned Cost of the commercial quotes, said the report.
In addition to the cost of the deal, the report also spoke about the claims of faster delivery by the Modi government. “They also concluded that the delivery schedule of even the first 18 of the 36 flyaway Rafale aircraft in the new deal was slower than the one offered for the 18 flyaway aircraft in the original procurement process,” The Hindu report said. The experts said that while under the previous deal 18 of the 36 flyway aircraft were to be delivered faster. “While the Congress era deal had set a ceiling of 48 months to deliver the first 18 jets, the new agreement set the ceiling at 53 months,” the experts said, as per the report.
Interestingly, the chairman of the negotiating team has rejected claims of dissent note in the report.
All these issues (highlighted in today's Hindu report) were brought up during discussions within the Indian Negotiating Team, and also taken up in external negotiations: INT Chairman for #Rafale deal Air Marshal RKS Bhadauria to ANI pic.twitter.com/B5WkMLYGS3
— ANI (@ANI) February 13, 2019
Rafale deal negotiating team Chairman rejects claims of dissent note in contract report, says all observations suitably addressed
— ANI Digital (@ani_digital) February 13, 2019
Prices negotiated under NDA cheaper than the previous: CAG
On February 13, the CAG tabled a report on the last day of the parliament session. As reported by the Economic Times, the deal, under the Modi government, was fixed at 7.87 billion euros for 36 jets, this price was 2.86% cheaper than the one struck by UPA government. However, this percentage is much lower than the 9% which top ministers have been claiming. The main savings as per the report were made under the India Specific Enhancements. The Indian government had asked for 13 specific changes to suit India’s defence parameters. The cost of these upgrades, however, has now become cheaper, as reported by Times Now.
Additionally, CAG says that the percentage of 2.8% should be even higher since the banking and performance guarantees have been removed, which generally the winning companies have to give in standard commercial contracts.