Bharat Bhushan - Rafale deal row: Why procedure should be seen as no less crucial than price

By Dilip -
Why procedure should be seen as no less crucial than price  Both CAG and Parliament should closely examine the processes of decision-making; should they fail in this regard, it would be open to public-spirited citizens to file a petition in the courts 


The Rafale fighter jet deal controversy is unlikely to die down in the run up to the general elections. The Opposition has already questioned the price of the deal and the secrecy clause, and made charges of crony capitalism. There is an oblique suggestion of kickbacks involved. Normally such allegations would be par for the course in any lively democracy. So would the privilege motion moved in the Lok Sabha by the Congress party against the Prime Minister and the Minister for Defence. However, the defence minister’s over-the-top reaction during the no-confidence debate prompted several observers to wonder whether “the lady doth protest too much”.

Despite the furore over the past two weeks, several significant issues of procedure need to be addressed in public and in Parliament. The first question to ask for such a large deal would be: When did the Cabinet Committee on Security (CCS) clear it? It is the CCS which deals with capital expenditure of more than Rs 10 billion in defence-related purchases and projects. At 7.87 billion euros (over Rs 580 billion), this deal was valued several times over that limit. A Cabinet note would have been moved for clearance by the CCS and the Cabinet.

The government must clarify when this was done and whether the CCS decision was taken before the Prime Minister announced the deal in Paris on April 10, 2015. It might be argued that an earlier Cabinet sanction was already operative since India and France had been in negotiations for three years for the purchase of 126 Rafale fighter jets. However, the earlier deal for 126 aircraft was valued at Rs 7.15 billion per aircraft. On the other hand, the 36 Rafale aircraft bought by the Modi government were valued at Rs 16 billion per aircraft. The newly purchased aircraft are said to include elements not available in the earlier ones. Under these circumstances, it is open to question whether the purchase can be judged as price escalation or as a new deal altogether. In case of price escalation, the government’s “Transaction of Business Rules” (TBR) say that if escalation is more than 20 per cent, then the new capital expenditure proposal has to go back to the CCS for approval. Was this approval sought and given before April 10, 2015? The French defence ministry, for its part, told Reuters that this was a new deal. 

For clearance as a new deal it should have gone to the CCS based on a proposal mooted by the defence ministry after Inter-ministerial consultation. This would mean consulting the finance ministry for the financial outgo and perhaps other ministries such as the Ministry of External Affairs. After consultations, the Cabinet Note would have been moved by the then defence secretary through the then Cabinet secretary. This is the laid out procedure. The Modi government should reveal the timeline of these steps to show that due procedure was followed.

The government, however, can also follow an alternative procedure. Let us assume that there was no prior approval of the CCS and that it was decided on the eve of the prime minister’s departure to France that the purchase of 36 Rafale fighter jets was the high-profile deliverable which would make the visit a success. In that case, after having announced the deal from Paris, a retrospective CCS and Cabinet approval would have been sought. In this scenario, Rule 12 of the TBR would have to be invoked for the “impulse buying” of the jets and seek the Cabinet’s approval ex post facto. Rule 12 allows that, “The Prime Minister may, in any case or classes of cases permit or condone a departure from these rules, to the extent he deems necessary.”

Since Rule 12 modifies the normal process of examination and inter-ministerial consultation, it is invoked by Prime Ministers only under situations of extreme urgency or unforeseen contingency, such as war. In this scenario, the proposal by the defence ministry should have given the justification for the urgency and listed the exceptional circumstances prevailing. The approval of the defence minister, Manohar Parrikar at the time, would be needed before sending the retrospective clearance proposal to the Cabinet.

Clearly, any circumvention of the TBR is permissible only when a reasoned argument for bypassing the Rules is put on record. The government should be prepared to justify its action in Parliament and share it with its auditors. The TBR follows from Article 77 (3) of the Constitution of India. Even a Prime Minister must record on file why he took a decision circumventing the Rules and if seeking ex-post facto Cabinet approval, the department concerned must justify the urgent and exceptional circumstances necessitating the circumvention of established procedure. 

If indeed Prime Minister Modi bypassed the collective decision-making process, are his reasons on record? It would be interesting to know how far the PM overstepped into areas of decision making that are the provenance of the defence minister. Under the “Allocation of Business Rules” of the government, “procurement exclusive to the Defence services” comes under the sole remit of the defence ministry. Some press reports which appeared at the time suggested that the Rafale decision came as a surprise to Defence Minister Parrikar. He was apparently on his way to the airport to take flight to Goa when he was called to the Prime Minister’s Office and informed of the purchase decision by the Prime Minister.

It must also be appreciated that government-to-government deals are not necessarily better than open commercial deals. Soviet-era defence deals and even those with Russia are examples of opaque government-to-government deals where rent seekers can have a field day. They allow the actors to hide behind secrecy clauses, lack transparency and confound the process of accountability.

Both the Comptroller and Auditor General (CAG) and Parliament should closely examine these processes of decision-making. They are no less important than the price of the jet fighters or the charges of crony capitalism. Should they fail in this regard, it would be open to public spirited citizens to file a petition in the courts.
https://www.business-standard.com/article/opinion/rafale-deal-row-why-procedure-should-be-seen-as-no-less-crucial-than-price-118073000181_1.html


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