Pranab calls for greater synergy between public spending and private enterprises CHIDAMBARAM ASKS DEFENCE PSUs TO IMPROVE THEIR COMPETITIVENESS INTERNATIONAL SEMINAR ON DEFENCE FINANCE & ECONOMICS OPENS
	17:28 IST

The External Affairs Minister, Shri Pranab Mukherjee has called for greater synergies between public spending and private enterprises with regard to defence production. Inaugurating a three-day International Seminar on Defence Finance and Economics here today, he said there are spin-offs from such synergies that could bring immense benefit to the social sector and reduce the cost of defence through such policy initiatives as making off-sets integral to defence purchases. Shri Mukerjee said It is the host of measures like these that will make Defence expenditure most sustainable, affordable and accountable apart from creating economic growth spirals. The External Affairs Minister was of the opinion that techniques like Outcome Budgeting, Accrual Accounting, the Concurrent Audit etc., need to be applied vigorously in planning and managing the brugeoning Defence expenditure. Referring to the common refrain of affordability, sustainability and accountability, the External Affairs Minister said Defence Finance & Economics cannot remain pre-occupied with the first two; accountability will need to be built into the entire process of strategic thinking, analysis, assessment and execution of plans. Shri Mukherjee said new paradigms in accounting and budgeting will have to be evolved to meet the newer challenges of not just providing a format for defence outlays but bringing about greater transparency in defence expenditure. Shri Mukherjee said zero-based budgeting, Outcome budgeting and Accrual Accounting will need to be applied more vigorously in planning and managing defence expenditure, than has been the case so far. As the defence expenditure involves huge outlays, there is a need for robust audit systems not just to keep the system on track but to provide useful insights into more efficient ways of achieving the defined objectives, the Minister added. Addressing the seminar the Union Finance Minister, Shri P. Chidambaram said that Defence PSUs needs to improve their comptitiveness by reducing costs and enhancing productivity. He said, "The argument that the Government in all circumstances must support loss making undertakings or inefficient ordnance factories because of their strategic importance or surge capacities is difficult to sustain in an increasingly globalised world with many more efficient alternatives. Efficiency, productivity and true competitiveness have to be the underpinning of a strong and vibrant Defence Industrial Base." Shri Chidambaram said that optimal allocation and utilisation of resources is the challenge before Defence Finance & Economics. Referring to the many positive aspects of India's economic growth in the last few years, he stated that policy changes are already in place to allow private sector participation in the Defence sector with up to 100% equity ownership. Shri Chidambaram said the partnership has to be further strengthened and taken to higher levels with greater outsourcing by Defence PSUs, Ordnance Factories, R&D Labs etc. The Minister said Defence Accounts Department must constantly review their systems and procedures for faster service delivery. Shri Chidambaram was of the opinion that Cash Management Systems, Management Information Systems, Migration to International Accounting Standards are some of the important aspects in this context. Speaking on the occasion the Minister of States for Defence, Shri M.M. Pallam Raju referred to the role played by Information Technology in Defence Finance & Economics. He complimented Shri Vinod Mishra, Secretary(Defence Finance) for having launched Mission Excel IT in Defence Finance which has become a role model of e-governance in India. Addressing the gathering, the Defence Secretary Shri Shekhar Dutt stated that military power has rapidly moved into high technology and high cost arenas, demanding careful planning and resource investment. He said as defence spending takes away resources from alternative uses and channels them into the development of military capability, it is evident that economic analysis and reasoning can be applied, in multiple dimensions, to such expenditure. The seminar has been organised by the Finance wing of the Ministry of Defence in cooperation with Ministry of Finance besides CII, ASSOCHAM and FICCI and is being attended by delegates from 26 countries. SK/SKS/KSS/