The much waited CAG audit report on the Rafale Deal was tabled in the Parliament today. The conclusions of the report are unlikely to please the Congress party and its President which has been crying hoarse over the deal.
Although the CAG does not mention the price details of the deal, it provides a comparative analysis between the MMRCA deal for 126 deals during the UPA government and the deal to purchase 36 Rafale jets from the French government. Some major points in the portion of the report that deals with the Rafale deal are as follows:
Price
Rahul Gandhi has been alleging that Modi government is paying ₹1600 crore per Rafale jet, while the UPA govt was buying the same for ₹526 crores each. But the CAG quotes that the current Rafale deal actually is cheaper than the unconcluded deal of the UPA government on most counts.
The report states that India saved 17.08% money for the India Specific Enhancements in the 36 Rafale contract as compared to the 126 aircraft deal. While on the weapons package, the current deal is 1.05% cheaper.
Although the engineering support package and the performance based logistics are costlier by 6.54% in the current deal, the CAG’s audit report concludes that overall the NDA government’s 2016 Rafale deal is 2.86% cheaper than the UPA’s deal in 2007.
The report further mentions that the price of the basic aircraft is the same in both the deals.
HAL
Rahul Gandhi had been alleging that the Rafale deal was snatched from HAL and given to Anil Ambani, but the CAG report points out that the UPA deal could not be finalised due to disagreements over HAL, which was to make 108 jets in India.
CAG notes that HAL wanted that the man-hour quoted by Dassault should be multiplied by a factor of 2.7 for calculating man-hour required by HAL. But this had created a big problem, because if the manpower cost of 108 jets goes up by 2.7 times, Dassault no longer remains the lowest bidder, making the whole process impossible to implement.
CAG report also says that HAL was responsible for 108 jets to be made by it, but the Indian government insisted that Dassault should take responsibility for all the 126 jets under the deal. Dassault didn’t agree to it, it led to a stalemate in negotiations, and ultimately the deal had to be cancelled.
Sovereign/Bank Guarantee
Another allegation against the current deal is that the Inter Governmental Agreement waives the Sovereign/Bank Guarantee which is usually mandated in defence deal as per the DPP.
The CAG report mentions that both the French government and Dassault were made jointly responsible in the deal, which would make the French government equally responsible to fulfil its obligations. Therefore the law ministry was of the opinion that a separate guarantee from France was not needed. The government of France also had said that “the guarantees already provided by the French government were far-reaching and unprecedented”.
Delivery Schedule
Another question that the anti-Rafale lobby keeps asking is where are the Rafale jet that the Modi government has bought. But the CAG report concludes that the delivery schedule of the 36 aircraft in the current deal is better than the proposal made for the first 36 jets in the 126 aircraft deal, which included 18 to be made in Franch and the next 18 to be made in India.
The UPA deal
Rahul Gandhi keeps saying the inconclusive deal during the UPA government was better than the current one. But CAG has found major loopholes in the earlier bid process. The CAG report states that the Defense Ministry had said in 2015 that the Dassault Aviation Rafale proposal during the UPA era should have been rejected as it did not meet the RFP requirements.
According to CAG, the L1 subcommittee had made mistakes in price calculation from the bids submitted by the vendors. It also says that Dassault proposal was not compliant with the RFP and it should have been rejected in the TEC stage itself. It also says that even the proposal of Eurofighter was also not compliant with the RFP. Moreover, Dassault was not the lowest bidder after taking into account the price escalation due to increased manpower cost of HAL. Therefore, the deal had to be cancelled. This conclusion by CAG proves that the Modi government’s decision to scrap the earlier deal in 2015 was correct.
The CAG notes that the process to buy the aircraft had started in 2000, but even after 15 years, no progress could be made. Therefore, the process had to be cancelled in the year 2015.
Perhaps suspecting that the CAG report will exonerate the Modi government, the Congress President had already dubbed it the ‘Chowkidar Auditor General’ report. It was only days after the party had raised a lot of hue and cry demanding to see the report. The party has recently questioned the impartiality of the CAG as well.
Union Finance Minister Arun Jaitley has targeted Rahul Gandhi over the CAG report on social media and said that “It cannot be that the Supreme Court is wrong, the CAG is wrong and only the dynast is right.” He further stated that “The lies of ‘Mahajhootbandhan’ stand exposed by the CAG Report.”
