CAG slams defence PSUs for miserably failing self-reliance goals

The Comptroller and Auditor General of India has slammed defence public sector units (PSUs) for performing poorly because of which the objective of self-reliance could not be met. The reason, CAG said, was that a majority of contracts that were entrusted to these PSUs were delayed, which adversely affected Indian Army’s plans for capability enhancement.

The report from CAG repeats what the private sector feels about getting more orders from the government, since a majority of contracts in the last two years have gone to PSUs. As per the report, 63% of the contracts given to PSUs from 2007 to 2012 were delayed for various reasons.

"Besides impacting defence preparedness, the delay had financial implications towards loss of interest on payments made to DPSUs. The objective of self-reliance in defence production had also not been achieved," said the CAG report which was presented in the parliament yesterday.

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The private sector in defence manufacturing has already complained to the Prime Minister's Office (PMO) that the defence ministry is favouring PSUs despite their delays, because of which they don’t received orders as per their capabilities.

The CAG report was prepared after a thorough study of at least nine major army projects and assessing all contracts placed on PSUs. As per the report, the "inordinate delay in supply of critical weapons and equipment" had "hampered the modernisation and capability enhancement plan of Indian Army".

The delays also led to the government facing a loss of Rs 1,931 crore because of accrued interest on advances that were paid to these DPSUs.

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