History of Circumventing Budgetary Caps Puts a Black Mark on Army

Published: 21st July 2014 06:00 AM  |   Last Updated: 21st July 2014 01:27 AM   |  A+A-

NEW DELHI: An internal review by the Ministry of Defence (MoD) has found major lacunae in the way the Army Commanders are using the financial powers delegated to them. And it has led to serious differences between the military top brass and  bureaucrats on the matter of enhancing financial powers (of Army Commanders).

The report comes at time when the Army Headquarters (HQ) has sought a hike in their financial powers to buy necessary equipment and supplies for troopers on operational deployment in the insurgency-hit North-East and Jammu and Kashmir.

But an extensive review of the delegation of financial powers, carried out by the Defence Finance Department, pointed out that senior military officers circumvent the Budgetary caps, primarily due to lack of checks and balances in the existing system of Integrated Financial Advisers (IFAs) introduced in 2006 under the UPA regime.

To tighten the screws on expenses under the delegated powers, the committee has recommended that the Army, apart from adopting e-procurement system using information technology, should also introduce e-concurrence system for approvals for the expenses.

A 95-page report of the Committee on Review of Delegation of Powers under the MoD (Finance) was submitted to Defence Secretary R K Mathur earlier this month. The panel was set up on January 23. A copy of the report was accessed by Express.

The need for a review was felt after demands for expanding the scope of their financial powers were made by the Army Commanders. But, recent internal audits by the Ministry of Defence threw up cases, where the use of financial powers were not in conformity with the spirit of the June 2006 government order enhancing the financial powers of the Armed Forces, according to sources.

The review committee’s report noted that in all, 192 special audits were conducted in 2011-12 by the Controller General of Defence Accounts (CGDA), which made 864 observations that could be considered as deviations or circumventing of the cap in financial powers ordered in 2006.

Among the observations made by the CGDA was the “splitting of requirements (by the Army) to enable processing (the purchases) under powers of lower Competent Financial Authority (CFA) or under inherent powers of the CFAs without the IFA’s concurrence,” the report said.

Other deficiencies observed by the internal audits, include procurement in excess of entitlement and incorrect assessment of requirement.

In some cases, there was no proper use of costing methodology, due to which there was failure in undertaking price benchmarking.

Most of these illustrations have been brought out as case studies by the Comptroller and Auditor General (CAG) reports of the past few years, the report said.

Suggesting that there was a need to tighten the way the Armed Forces use their financial powers, the committee has proposed greater ministry oversight in the matter, which would mean more involvement of the bureaucrats in scrutinising the way the Army officers purchase equipment that are needed urgently.

It has also proposed that the Army makes use of information technology that could enable “transparency, equity, efficiency and accountability” in the processes under delegated powers, particularly procurement-related activities.

 “Therefore, e-procurement, which has already been mandated by the government using the software package developed by the National Informatics Centre, should be introduced in a time-bound manner,” the committee has proposed.

“In addition, e-concurrence has been recommended as a way forward to meet the needs of the Services to provide Integrated Financial Advisers system coverage, particularly in remote and far-flung locations,” it said and added that the existing IFA system needed to be consolidated instead of going in for further expansion.

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