Lahiri for judicious use of funds for defence

The way Indian defence finance is structured, there is limited scope for efficient use of funds. But given that security threats are no longer bilateral but global and wars would be fought with technology, it is important to get a technical edge over others.

Therefore, efficiency in fund deployment was a crucial element in defence finance, Chief Economic Advisor with the Finance Ministry, Ashok Lahiri said.

He was speaking at a seminar on Defence Finance and Economics here.

Lahiri said there were a number of problems with the procurement of weapons systems. There was absence of competition.

India could not afford to outsource as much defence as it might have been able to do and, therefore, it was hard to negotiate prices through competitive bidding.

There were issues of international mergers and acquisitions that constricted the world arms market and undermined competition further as well as issues of dual use technology.

But, Lahiri said, defence continued to be the most important economic activity in the world although the final outcome was hard to measure. Unlike elsewhere in the world, post Cold War, threats to India's security had not subsided especially after 9/11.

Defence economics had to work out its priorities in the context of multifarious demands on the Indian economy, as well a fiscal deficit which forced India to borrow, Lahiri said.