Claims of a booming, fastest growing economy have come up against yet another hard reality: the government does not have enough money to spare for critical needs of defence forces.

According to a report in the Economic Times (ET), the Indian Army has decided to drastically cut down its supplies from state-owned ordnance factories from 94% to 50% and spend the money saved to replenish the depleting stocks of critical ammunition and spares for a short intense war which the public sector unit has failed to provide.

The reason cited was that the Centre has not provided additional funds for these. The cut in orders for procurements from Ordnance factories is likely to hit supplies of clothing (combat dress, berets, belts, shoes) to soldiers who will have to spend their own money to buy these items from civilian markets, said the ET report. Even spares for certain vehicles will suffer, said the report.

The Army is working on three major projects to build this stock and requires funds worth thousands of crores, but since the Centre has not been forthcoming with the money, the Army has been forced to dig into its own minimal budget to cater to these requirements, said the ET report quoting unnamed officials.

Of the three projects, only one has begun and that payment for the emergency procurement for this project has been distributed over the years due to shortage of funds, the report said.

Another official explained that about Rs 5,000 crore has been spent on emergency procurement and another Rs 6,739.83 crore needs to be paid.

This project with the 10(I) order now costs about Rs 21,739.83 crore. The 10 (I) is ammunition and spares needed for 10 days of intense war.

For remaining payment of the two projects, the Army is trying to figure out how to fund them as the Centre has asked it to spend from its own budget.

The official said in March, the Army had made an initial cut in supplies from ordnance factories. “In March, the ordnance factories’ allocation for supplying items such as clothing, spares and certain ammunition was brought down to about Rs 11,000 crore,” ET quoted the official as saying.

Now, said the official, the army has decided to bring down purchases bought from ordnance factories from 94% of their products to 50%, so “from Rs 11,000 crore given to the ordnance factories it was brought down to around Rs 8,000 crore”. The officials added that the deficiency in ammunition and spares is because the ordnance factories have not been able to completely meet the requirements.

He added that the move would save about Rs 3,500 crore every year. “We will add another Rs 4,000 crore, bringing the total amount to Rs 7,000-8,000 crore a year. For three years, we should have close to Rs 24,000 crore, which will be used for the emergency procurement and the order for 10 (I),” said the official.

Providing a bit of background, the ET report said that following the 2016 Uri terrorist attack, the Army found that 46 types of critical ammunition, including for the artillery, tanks such as Armour Piercing Fin-Stabilised Discarding Sabot, anti-material, and 10 types of spares for vehicles and equipment were below 10 (I).

Recently ordnance factories had protested against the move. A few days ago, a top Army officer had met a senior defence ministry official and convinced him of the reason behind the move. The move, however, could create a problem for the government, as ordnance factories and several MSMEs could go into litigation as they have several past orders from the Army.

The Centre has also identified eight types of ammunition for manufacture by Indian private firms for Rs 1,700 crore per year for the next 10 years. This ammunition includes 30mm used by the infantry, 120mm extended range, 23mm and 40mm grenades.

The Army is also procuring Pinaka rockets over 10 years, which is worth Rs 1000 crore a year. “With these steps we should have 90% per of ammunition for 10 (I) by June 2019. Even at this juncture we are relatively fine, because all types of ammunition will not be used during war. But the government has to provide budgetary support. So far it has not and the Army has been forced to use its own budget at the cost of modernisation and maintenance,” said an official.